Avon 2012 Segment Analysis
Note 13: Segment Information
For the purpose of this assignment, I am going to discuss my interpretation of note 13, as well as, the segment analysis spreadsheet. Note 13 talks about manufacturing facility in Europe that supplies the products for multiple segments. These segments inherit the costs based upon volume used by those respective segments. I will assume that since Asia Pacific, Latin America, and North America were not mentioned, these regions have their own manufacturing that takes place for their own segment. Also mentioned in the note was that intersegment transfers and sales are not significant. I will be considering these transactions as non-existent or not relative as an assumption.
I am going to start by looking through the segment information spreadsheet. The first tab is the segment dollar amounts over the last 8 years. We are also given the 8 year average and the recent 5 year average. I was able to unhide the data which gave me information for the Latin America, North America, Asia Pacific / China and Central / Easter Europe dating back to 2001. What we have seen over this time span is a rapidly growing market in Latin America in terms of revenue. However, operating profit has growing at half the rate as revenue. This tells me that the costs of goods sold and SG&A prices have risen dramatically over this time span per product. Furthermore, total assets have been growing at an even faster rate. This rate does exceed the growth rate of depreciation and amortization which tells me that they are in a growing strategy. Capital Expenditure has been growing at a rate similar to revenue, but dropped 42 percent in 2011. My guess is that they may have written down some of their debt at this time. This market is not only their most successful market in comparison to others, but it is all by far the largest. Latin America is accounting for 45 percent of revenue, 62.6 percent of operating profit, and 45 percent of the company’s assets in 2011. The 45
For the purpose of this assignment, I am going to discuss my interpretation of note 13, as well as, the segment analysis spreadsheet. Note 13 talks about manufacturing facility in Europe that supplies the products for multiple segments. These segments inherit the costs based upon volume used by those respective segments. I will assume that since Asia Pacific, Latin America, and North America were not mentioned, these regions have their own manufacturing that takes place for their own segment. Also mentioned in the note was that intersegment transfers and sales are not significant. I will be considering these transactions as non-existent or not relative as an assumption.
I am going to start by looking through the segment information spreadsheet. The first tab is the segment dollar amounts over the last 8 years. We are also given the 8 year average and the recent 5 year average. I was able to unhide the data which gave me information for the Latin America, North America, Asia Pacific / China and Central / Easter Europe dating back to 2001. What we have seen over this time span is a rapidly growing market in Latin America in terms of revenue. However, operating profit has growing at half the rate as revenue. This tells me that the costs of goods sold and SG&A prices have risen dramatically over this time span per product. Furthermore, total assets have been growing at an even faster rate. This rate does exceed the growth rate of depreciation and amortization which tells me that they are in a growing strategy. Capital Expenditure has been growing at a rate similar to revenue, but dropped 42 percent in 2011. My guess is that they may have written down some of their debt at this time. This market is not only their most successful market in comparison to others, but it is all by far the largest. Latin America is accounting for 45 percent of revenue, 62.6 percent of operating profit, and 45 percent of the company’s assets in 2011. The 45