Financial Analysis of I.T Ltd., Hong Kong
Company background
I.T Limited (0999.HK) is an investment holding company based in Hong Kong. It was listed on the main board of The Hong Kong Stock Exchange on 4-March-2005. The company offers a wide range of apparel products. It sells its products as well as offers a variety of national and international brands through its network of retail stores. As of February 28, 2011, it operated 392 stores in Hong Kong and Mainland China.
Objective
To undertake a comprehensive analysis on the financial performance of I.T. Limited. Detailed financial ratio analysis will be performed. An estimation of the firm’s cost of equity capital and weighted average cost of capital will also be provided.
Horizon of analysis
We will focus on its performance in the latest 5 fiscal years.
A) Detail financial analysis
The financial analysis will be conducted in two ways. First, the major accounts on financial statements will be inspected in order to derive a general picture on the healthiness of the business. Second, PERL (Performance, Efficiency, Risk, Liquidity) framework will be used to further analyze the financial performance of the company.
I. Going through the financial statements
We can get a glimpse of the healthiness of the business by looking into the trend of accounting items in income statement, balance sheet and cash flow statement respectively.
Consolidated income statement
(Referring to appendix A - table 1 and 2)
2008/09 was a special year, financial tsunami happened. Therefore there was a huge profitability impact in that year, resulting in a large decrease in operating profit. And since the market recovered in 2009/2010, the profitability suddenly increased a lot in that fiscal year. Other than these two special years, the overall growth trend in sales turnover, costs, and profit is healthy.
(Referring to appendix A - table 3)
Standardizing the income statement can extract extra information. All the accounts are expressed as a percentage of
I.T Limited (0999.HK) is an investment holding company based in Hong Kong. It was listed on the main board of The Hong Kong Stock Exchange on 4-March-2005. The company offers a wide range of apparel products. It sells its products as well as offers a variety of national and international brands through its network of retail stores. As of February 28, 2011, it operated 392 stores in Hong Kong and Mainland China.
Objective
To undertake a comprehensive analysis on the financial performance of I.T. Limited. Detailed financial ratio analysis will be performed. An estimation of the firm’s cost of equity capital and weighted average cost of capital will also be provided.
Horizon of analysis
We will focus on its performance in the latest 5 fiscal years.
A) Detail financial analysis
The financial analysis will be conducted in two ways. First, the major accounts on financial statements will be inspected in order to derive a general picture on the healthiness of the business. Second, PERL (Performance, Efficiency, Risk, Liquidity) framework will be used to further analyze the financial performance of the company.
I. Going through the financial statements
We can get a glimpse of the healthiness of the business by looking into the trend of accounting items in income statement, balance sheet and cash flow statement respectively.
Consolidated income statement
(Referring to appendix A - table 1 and 2)
2008/09 was a special year, financial tsunami happened. Therefore there was a huge profitability impact in that year, resulting in a large decrease in operating profit. And since the market recovered in 2009/2010, the profitability suddenly increased a lot in that fiscal year. Other than these two special years, the overall growth trend in sales turnover, costs, and profit is healthy.
(Referring to appendix A - table 3)
Standardizing the income statement can extract extra information. All the accounts are expressed as a percentage of