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Esprit Accounting Assignment

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MASTERS IN BUSINESS ADMINISTRATION

Financial Modelling

Course Work

Financial Statement Analysis on ESPRIT HOLDINGS LTD

By: Zahoor Soomro

INDEX

Sr No

CONTENTS

Page No.

1. 2. 3. 4.

Executive Summary Company Profile Introduction A framework for Evaluating Company Main Ratios (Table)

1 2 3 3 3 4 4 5 5 6 6 7 7 7 7 8 8 8 9 9 10 10 11 11 12 13 14

5.

Profitability Ratios 5.1 Return on shareholders funds (ROSF) 5.2 Return On Capital Employed 5.3 Gross profit Margin Ratios 5.4 Net Profit Ratio

6.

Efficiency Ratios 6.1 The average stock turnover 6.2 Average settlement period for receivables 6.3 The sales to capital employed 6.4 Average Payment Period

7.

Liquidity Ratios 7.1 The current ratio 7.2 Quick Ratio

8. 9.

Gearing Ratios Investment Ratio 9.1 Interest covering ratio 9.2 Dividend payout ratio 9.3 Earning per share 9.4 Price Earning Ratio (P/E)

10. 11. 12.

Conclusion References Appendix

Esprit Ratio Analysis 1. Executive Summary Esprit has been performing excellent in overall operations, demonstrating sustainable growth in turnover and earnings. The Group’s turnover reached HK$29.6 billion, an increase of 26.9%. With improving efficiency, the Group’s operating profit grew 31.4% to HK$6,259 million. This is a big plus in the upward trend in the growth. The ratio analysis is the effective and reliable evidence of the company’s success. There are several ratios that are calculated in the report. The significant success depicted in the profitability ratios which shows the gross profit margin has constant trend line through out 3 consecutive financial years. the period. Where as ROSF (Return on shareholder funds) is getting upward trend in the current financial year

The Esprits efficiency ratio clearly indicates the strength of the company to operate the business effectively. Where as the receivable

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