An Analysis of Avon's Financial Statement
An Analysis of Avon’s Financial Statement
For 2006 to 2007
Abstract
This paper is an attempt at answering weather Avon’s performance improved, declined, or remained the same from 2006 to 2007 through and analysis Avon’s financial statements from 2006 and 2007.
An Analysis of Avon’s Financial Statement
For 2006 to 2007 Based on the following analysis of Avon’s financial statements for 2006 and 2007 the following changes occurred during 2006 and 2007. The gross profit margin decreased by 0.7%, the operating profit margin increased by 0.7%, the net profit margin decreased by 0.1%, the coverage ratio decreased by 0.2%, the return on shareholders’ equity increased by 0.1%, the return on assets increased by 0.2%, the debt to equity ratio increased by 104.6%, the long term debt to capital ratio decreased by 0.1%, days of inventory increased by 0.3 days, the inventory turnover ratio decreased by 1.2%, and the average collection period increased by 3 days. In conclusion Avon’s performance declined from 2006 to 2007 but they are poised to take on debt to improve their inventory inefficiencies and improve their profitability.
a. Gross profit margin
2006 (8763.9-3416.5)/ 8763.9= 61% 2007 (9938.7-3941.2)/9938.7=60.3% b. Operating profit margin
2006 (8763.9-4586)/ 8763.9= 47.7% 2007 (9938.7-5124.8)/9938.7= 48.4% c. Net profit margin
2006 480.1/8763.9= 5.5% 2007 533.3/9938.7= 5.4% d. Times-interest-earned (coverage) ratio
2006 761.4/99.6= 7.6% 2007 827.7/112.2= 7.4% e. Return on shareholders’ equity
2006 480.1/790.4= 0.6% 2007 533.3/711.6= 0.7% f. Return on assets
2006 477.6/5238.2= 9.1% 2007 530.7/5716.2= 9.3% g. Debt-to-equity ratio
2006 4447.8/790.4= 562.7% 2007 5004.6/711.6= 703.3% h. Long-term debt-to-capital ratio
2006 1170.7/5238.2= 0.2% 2007 1167.9/5716.2= 0.2% i. Days of inventory
2006 900.3/(3416.5/365)= 96.2 2007 1041.8/(3941.2/365)= 96.5 j. Inventory turnover ratio
2006 3416.5/900.3= 379.5% 2007
For 2006 to 2007
Abstract
This paper is an attempt at answering weather Avon’s performance improved, declined, or remained the same from 2006 to 2007 through and analysis Avon’s financial statements from 2006 and 2007.
An Analysis of Avon’s Financial Statement
For 2006 to 2007 Based on the following analysis of Avon’s financial statements for 2006 and 2007 the following changes occurred during 2006 and 2007. The gross profit margin decreased by 0.7%, the operating profit margin increased by 0.7%, the net profit margin decreased by 0.1%, the coverage ratio decreased by 0.2%, the return on shareholders’ equity increased by 0.1%, the return on assets increased by 0.2%, the debt to equity ratio increased by 104.6%, the long term debt to capital ratio decreased by 0.1%, days of inventory increased by 0.3 days, the inventory turnover ratio decreased by 1.2%, and the average collection period increased by 3 days. In conclusion Avon’s performance declined from 2006 to 2007 but they are poised to take on debt to improve their inventory inefficiencies and improve their profitability.
a. Gross profit margin
2006 (8763.9-3416.5)/ 8763.9= 61% 2007 (9938.7-3941.2)/9938.7=60.3% b. Operating profit margin
2006 (8763.9-4586)/ 8763.9= 47.7% 2007 (9938.7-5124.8)/9938.7= 48.4% c. Net profit margin
2006 480.1/8763.9= 5.5% 2007 533.3/9938.7= 5.4% d. Times-interest-earned (coverage) ratio
2006 761.4/99.6= 7.6% 2007 827.7/112.2= 7.4% e. Return on shareholders’ equity
2006 480.1/790.4= 0.6% 2007 533.3/711.6= 0.7% f. Return on assets
2006 477.6/5238.2= 9.1% 2007 530.7/5716.2= 9.3% g. Debt-to-equity ratio
2006 4447.8/790.4= 562.7% 2007 5004.6/711.6= 703.3% h. Long-term debt-to-capital ratio
2006 1170.7/5238.2= 0.2% 2007 1167.9/5716.2= 0.2% i. Days of inventory
2006 900.3/(3416.5/365)= 96.2 2007 1041.8/(3941.2/365)= 96.5 j. Inventory turnover ratio
2006 3416.5/900.3= 379.5% 2007
References: Thompson, A., Strickland, A.J., & Gamble, J.E. (Ed.). (2010). Crafting and exiting strategy. New York, NY: McGraw-Hill/Irwin.