Aurora Textile
Introduction
Aurora Textiles is a textile company that specializes in hosiery, knitted outerwear, woven, and industrial and specialty products. They develop finished fabric to meet specific needs as the leading yarn manufacturer established in the 1900s. However, both Aurora and the whole U.S. textile industry have been struggling financially due to globalization and other external factors. Aurora itself may not have responded quickly enough to the deteriorating business environment and has caused their net earnings and concerning ratios leaning toward the negative side. The company needs to either make crucial amends with new investments or stay with its current situation.
Problem #1
How has Aurora Textile performed over the past four years? Be prepared to provide financial ratios that present a clear picture of Aurora’s financial condition.
***Refer to Appendix 1 for financial ratios***
Aurora’s financial performance during 1999 to 2002 was quite discouraging. Aurora has both domestic and international components to its market sales, but 90% of its revenue came from domestic textile market. The top two leading profitable gains were yarn and knitted-outerwear revenue source for Aurora. However, with rising competition all around the world of low production costs as just the start of all their problems, their performance were mostly in the downsides. These past four years, Aurora’s turnover ratios are in concern and have a downward trend. The days’ receivable and inventory outstanding takes much longer to collect each year. In addition, the debt management ratios show a fast rate increase to leveraging in the company. By paying attention to their escalating numbers in long-term borrowing, debt-to-equity, and equity multiplier, we can see that the company isn’t managing their money effectively. Moreover, by averaging out all four years, their net sales have declined by 15%. The profitability ratios, such as profit margins, ROA…etc. never left the negatives.
Aurora Textiles is a textile company that specializes in hosiery, knitted outerwear, woven, and industrial and specialty products. They develop finished fabric to meet specific needs as the leading yarn manufacturer established in the 1900s. However, both Aurora and the whole U.S. textile industry have been struggling financially due to globalization and other external factors. Aurora itself may not have responded quickly enough to the deteriorating business environment and has caused their net earnings and concerning ratios leaning toward the negative side. The company needs to either make crucial amends with new investments or stay with its current situation.
Problem #1
How has Aurora Textile performed over the past four years? Be prepared to provide financial ratios that present a clear picture of Aurora’s financial condition.
***Refer to Appendix 1 for financial ratios***
Aurora’s financial performance during 1999 to 2002 was quite discouraging. Aurora has both domestic and international components to its market sales, but 90% of its revenue came from domestic textile market. The top two leading profitable gains were yarn and knitted-outerwear revenue source for Aurora. However, with rising competition all around the world of low production costs as just the start of all their problems, their performance were mostly in the downsides. These past four years, Aurora’s turnover ratios are in concern and have a downward trend. The days’ receivable and inventory outstanding takes much longer to collect each year. In addition, the debt management ratios show a fast rate increase to leveraging in the company. By paying attention to their escalating numbers in long-term borrowing, debt-to-equity, and equity multiplier, we can see that the company isn’t managing their money effectively. Moreover, by averaging out all four years, their net sales have declined by 15%. The profitability ratios, such as profit margins, ROA…etc. never left the negatives.