Financial Accounting
2.0 Ratio analysis
The next will introduce the Mulberry’s and its competitor—Burberry’s financial ratios from their financial statements from 2010-2012.
2.1 Profitability analysis
2.1.1 Net profit margin
Table 2.1 Mulberry and Burberry’s net profit margin Net profit margin | 2010 | 2011 | 2012 | Mulberry | 4.12% | 14.03% | 15.02% | Burberry | 6.42% | 13.74% | 14.27% |
Data source: Mulberry’s and Burberry’s 2010-2012 annual reports
From Table 2.1 it can find that Mulberry’s net profit margin was lower than Burberry’s in 2010, while higher after 2011. Although both had a rapid increase in 2011, Mulberry’s net profit margin increased faster than Burberry’s (2.41 times: 1.14 times), due to a big increase in net profit. Depending on Director's report, competitive pressures, changes in luxury fashion and hence consumer demands are continuing risks which may result in the loss of sales. Mulberry manages this risk by the continuous investment in the design of new products and marketing to stimulate customer interest and by maintaining strong relationships with customers.
2.1.2 Gross profit margin
Table 2.2 Mulberry and Burberry’s gross profit margin gross profit margin | 2010 | 2011 | 2012 | Mulberry | 58.97% | 65.35% | 66.18% | Burberry | 62.82% | 67.26% | 69.94% |
Data source: Mulberry’s and Burberry’s 2010-2012 annual reports
From 2010-2012, Mulberry’s gross profit margin was lower than Burberry on the condition that its net profit margin was higher than Burberry’s in 2011 and 2012. The British luxury leather goods and accessories maker has had a tough year dealing with the global slowdown in consumer spending and its impact on sales(Sonia, 2012), so the increase of gross profit margin is due to the decrease of productive cost caused by and continuous expanded business and scale economy (Berman et al., 2006).
2.1.3 Return on assets (ROA)
Table 2.3 Mulberry and Burberry’s ROA ROA | 2010 | 2011 | 2012 | Mulberry | 11.64% | 27.37% | 32.76% |
The next will introduce the Mulberry’s and its competitor—Burberry’s financial ratios from their financial statements from 2010-2012.
2.1 Profitability analysis
2.1.1 Net profit margin
Table 2.1 Mulberry and Burberry’s net profit margin Net profit margin | 2010 | 2011 | 2012 | Mulberry | 4.12% | 14.03% | 15.02% | Burberry | 6.42% | 13.74% | 14.27% |
Data source: Mulberry’s and Burberry’s 2010-2012 annual reports
From Table 2.1 it can find that Mulberry’s net profit margin was lower than Burberry’s in 2010, while higher after 2011. Although both had a rapid increase in 2011, Mulberry’s net profit margin increased faster than Burberry’s (2.41 times: 1.14 times), due to a big increase in net profit. Depending on Director's report, competitive pressures, changes in luxury fashion and hence consumer demands are continuing risks which may result in the loss of sales. Mulberry manages this risk by the continuous investment in the design of new products and marketing to stimulate customer interest and by maintaining strong relationships with customers.
2.1.2 Gross profit margin
Table 2.2 Mulberry and Burberry’s gross profit margin gross profit margin | 2010 | 2011 | 2012 | Mulberry | 58.97% | 65.35% | 66.18% | Burberry | 62.82% | 67.26% | 69.94% |
Data source: Mulberry’s and Burberry’s 2010-2012 annual reports
From 2010-2012, Mulberry’s gross profit margin was lower than Burberry on the condition that its net profit margin was higher than Burberry’s in 2011 and 2012. The British luxury leather goods and accessories maker has had a tough year dealing with the global slowdown in consumer spending and its impact on sales(Sonia, 2012), so the increase of gross profit margin is due to the decrease of productive cost caused by and continuous expanded business and scale economy (Berman et al., 2006).
2.1.3 Return on assets (ROA)
Table 2.3 Mulberry and Burberry’s ROA ROA | 2010 | 2011 | 2012 | Mulberry | 11.64% | 27.37% | 32.76% |