Mulberry Financial Analysis

Contents 1. Introduction 2 2. Main Body 2 2.1 Ratio Analysis 2 2.1.1 Profitability 3 2.1.2 Efficiency 4 2.1.3 Liquidity 6 2.1.4 Risk 7 2.2 Evaluation of Mulberry’s shares as a potential investment 7 2.2.1 Revenue and Share price 8 2.2.2 Return 10 2.2.3 Risk 14 2.3 Funding and capital analysis 15 2.3.1 Funding analysis 15 2.3.2 Working capital 18 2.4 Risk management and governance 20 2.4.1 Corporate governance of Mulberry 20 2.4.1 Risk & control management 22 2.4.3 Information and Communication 24 2.4.4 Monitoring 24 3. Conclusion 25 Reference 26

1. Introduction

The company that we chose is Mulberry Group. PLC. This is a company that produces and sells bags and
Acid test (2011:0.97x; 2010:1.48x)

Acid test is a ratio which trying to evaluate the company’s monetary asset. Different from current ratio, acid test is focusing on whether the company can repay its short-term liabilities with its monetary assets.

Acid test: Monetary current assets / current liabilities
Acid test in 2011: 33519/34555=0.97x
Acid test in 2011: 20453/13819=1.48x

Because there is high level of inventory in 2011 in order to support the adequate amount of goods to be sale, it is not unacceptable that the monetary current assets without inventory are less than current liabilities for this year. Furthermore, there are several trade payables occurred in 2011 while nil in 2010 in terms of Note 24.

2.1.4
Although the price touched bottom in 2009 due to the financial crisis, when there has been an uptrend in market between April in 2009 and April in 2010, Mulberry seemed to catch that opportunity and in April 2010, the price went up to the price peaked point in 2007.
It is crucial to mention that the marketing strategy as well as the performance of Mulberry group has contributed most to the significant increase since the second half year of 2009. According to Mulberry’s annual report and financial statement for the year ended 31 March 2010, they have continuously invested their business both in the UK and internationally, using retained profit and cash flow. For example, the showrooms opened in New York and Paris could be successful attempts, both of which have played an important role in the growth of profit.
In terms of the strategy has made an initial success, it can be assumed that there might be an unpredictable potential market share for Mulberry to explore. Actually, the assumption has been approved with the significant increase in revenue and share price for the next half year in 2010 and continued in