Zara Financial Report

Introduction: The following report is the study conducted to analyse the financial performance conducted for Zara UK (Fame, 2008).
Turnover: Considering the trends in Turnover

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It can be seen that there has been a major rise in turnover since 2002. One of the points that can be noted that there has been a major increase in the turnover since 2006. This is mainly due to increase in sales. The prospect for 2008 appears good and there is a potential for increasing turnover. However, the organisation needs to be cautious as there is a slow down expected which is expected to last next couple of years.

Profit before Tax: Considering the trends in studying the profit’s before tax

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Since 2000 there has been a drop in profits due to slowdown in markets before significantly rising in 2003. However, in 2004 the organisation suffered losses before breaking even in 2005. However, in 2006 the organisation suffered a major loss before recovering and making a small profit in 2007.

Return on Shareholder’s funds: Considering the return on shareholders funds

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From the plot it can be seen that the returns on shareholders funds have deteriorated badly since 2000. However since 2006 there has been a slow but steady increase in the confidence of investors and shareholders. Also the organisation has started increasing its profits and also bringing back investors confidence.

Profitability ratios: The following are the profitability ratios for Zara

Profit Margin: It is the ratio between Earnings before interest/ sales

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The profit margin fell to its lowest in 2005 before rising to make some profits in 2008. This year the organisation was successful in making a small profit margin

Return on Total assets: Return on total assets presents tells how well management is performing on all the firm 's resources. The following is the trends seen since the last few years

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In the past few years the organisation has not been successful in achieving higher financial returns on total assets. However, in the past couple of years the organisation is reversing this trend. This notifies that the organisation has undertaken steps to work effectively with its resources and ensure efficiency is present in the organisation. As this is a slowdown period the organisation needs to ensure that any wastage of resources is completely reduced and resources are utilised at their best.

Conclusion: Thus this is the study conducted to study the performance of Zara. From the analysis it has been seen that Zara has recovered from tough times in the past. However, it needs to be further careful in the present time as there is a big slow down and ensure that resources are efficiently used at all times.

References

1. Fame (2008), Fame database, Zara financial report, last accessed 27th Nov 2008

References: 1. Fame (2008), Fame database, Zara financial report, last accessed 27th Nov 2008