Country Road Executive Summary
Executive Summary
Country Road (ASX: CTY) is an upscale store located in Australia and New Zealand clothing retailer, with 68 freestanding stores and 77 department store concessions. It is traded on the Australian Stock Exchange, with South African company Woolworths Holdings Limited owning 88%. The company produces women 's clothing, footwear & accessories; men 's clothing, footwear & accessories; children 's clothing; and home wares. Country Road’s strategy for growth is to expand both product ranges and its retail footprint. In light of the current economic conditions, CTY has implemented several cost-saving initiatives. Management continues to focus on cost control and inventory management. This report looks at the Financial Performance …show more content…
This ratio is a measure of a firm’s ability to survive in the longer term and remain solvent. The entity’s debt coverage ratio for 2008 was 20.42% meaning that it would take 0.2 years to repay the existing long-term debts. This can be compared to previous years and the current loan term.
Cash flow from operating activities
The cash flow from operating activities (sales ratio) measures the relative amount of cash flow generated by each sales dollar. It is used to help interpret the profitability of an entity.
As shown in figure one, the cash flow from operating activities is 6.78%. This tells us that for every sales dollar received, the entity generated an operating cash flow of over 6 cents. Again, this ratio needs to be compared to previous and later years to determine whether it is reasonable or not. It also should be compared to the equivalent accrual based ratio of return on sales, which is calculated by profit divided by net sales.
Gross profit
Gross profit refers to the revenue less the cost of sales and is applicable to manufacturing and retail operations like Country Road. As shown in figure one, the gross profit for Country Road in 2008 was 37.46%. This shows that the business can create a positive profit …show more content…
As shown in figure 4, 2011’s cash flow ratio for Country Road was 72.31%. This ratio means that the entity can cover 72 percent of its current obligations.
2010’s Cash Flow Ratio was nearly 6% higher than the current years cash flow ratio, possibly meaning that it was more difficult for the entity to meet its financial obligations due to its decreased cash flow for the current financial period.
Debt coverage
The debt coverage ratio links the cash flows from operating activities with long term debt, in contrast to the cash flow ratio in which the link is to short term liabilities. This ratio is a measure of a firm’s ability to survive in the longer term and remain solvent. 2011’s debt coverage ratio for Country Road was significantly higher than the previous 3 years with it being 26.56%. This shows that the entity had success in covering its long-term debts for the year. This could have been due to its higher sales ratio, increased expenses and larger gross profit
Country Road (ASX: CTY) is an upscale store located in Australia and New Zealand clothing retailer, with 68 freestanding stores and 77 department store concessions. It is traded on the Australian Stock Exchange, with South African company Woolworths Holdings Limited owning 88%. The company produces women 's clothing, footwear & accessories; men 's clothing, footwear & accessories; children 's clothing; and home wares. Country Road’s strategy for growth is to expand both product ranges and its retail footprint. In light of the current economic conditions, CTY has implemented several cost-saving initiatives. Management continues to focus on cost control and inventory management. This report looks at the Financial Performance …show more content…
This ratio is a measure of a firm’s ability to survive in the longer term and remain solvent. The entity’s debt coverage ratio for 2008 was 20.42% meaning that it would take 0.2 years to repay the existing long-term debts. This can be compared to previous years and the current loan term.
Cash flow from operating activities
The cash flow from operating activities (sales ratio) measures the relative amount of cash flow generated by each sales dollar. It is used to help interpret the profitability of an entity.
As shown in figure one, the cash flow from operating activities is 6.78%. This tells us that for every sales dollar received, the entity generated an operating cash flow of over 6 cents. Again, this ratio needs to be compared to previous and later years to determine whether it is reasonable or not. It also should be compared to the equivalent accrual based ratio of return on sales, which is calculated by profit divided by net sales.
Gross profit
Gross profit refers to the revenue less the cost of sales and is applicable to manufacturing and retail operations like Country Road. As shown in figure one, the gross profit for Country Road in 2008 was 37.46%. This shows that the business can create a positive profit …show more content…
As shown in figure 4, 2011’s cash flow ratio for Country Road was 72.31%. This ratio means that the entity can cover 72 percent of its current obligations.
2010’s Cash Flow Ratio was nearly 6% higher than the current years cash flow ratio, possibly meaning that it was more difficult for the entity to meet its financial obligations due to its decreased cash flow for the current financial period.
Debt coverage
The debt coverage ratio links the cash flows from operating activities with long term debt, in contrast to the cash flow ratio in which the link is to short term liabilities. This ratio is a measure of a firm’s ability to survive in the longer term and remain solvent. 2011’s debt coverage ratio for Country Road was significantly higher than the previous 3 years with it being 26.56%. This shows that the entity had success in covering its long-term debts for the year. This could have been due to its higher sales ratio, increased expenses and larger gross profit