Financial Case Polo Ralph Lauran
Case Study Analysis One: - Polo/Ralph Lauren Corporation Nada Alrumaih
Executive Summary
The following report provides the results and recommended actions regarding Polo/Ralph Lauren Corporation (RL) current financial performance based on a thorough analysis and evaluation. The financial performance is compared to four other peer companies in the Retail Industry. The four companies chosen for peer comparison include Abercrombie & Fitch Company (ANF), Aeropostale, INC. (ARO), and GAP, INC. (GPS).
The results show that RL is managing its balance sheet very well; especially in the categories of profitability, capital efficiency, liquidity and financial leverage. The results also show that RL’s operations are running proficiently when viewing the CAGR, Debt/Asset Ratio, and Gross Profit Margin results.
Two areas were highlighted as chances to improve the overall productivity of the company and should be addressed accordingly. The areas include liquidity (quick ratio) and market valuation (market perception based on Price per Earning P/E). Once these areas were improved, the company will not have any significant risks to be concerned about.
By 2013, RL’s ability to quickly use their cash and convert other current assets into cash has decreased by 13.4%, which might put their ability to fulfill their short-term obligations and debts in risk. However, RL is still at top of peers in this area.
During the same year, P/E ratio of RL has decreased by 24%, which indicates that the market has poor expectation of the company’s future earning.
RL depends on department stores in selling their products especially in the US and Canada, which gives them little influence on what these department stores buy and offer their customers, or how they display their products. Also, department stores may force RL to merchandise at lower prices to increase their margin, which consequently effect RL’s revenues and P/E ratio and their liquidity
Executive Summary
The following report provides the results and recommended actions regarding Polo/Ralph Lauren Corporation (RL) current financial performance based on a thorough analysis and evaluation. The financial performance is compared to four other peer companies in the Retail Industry. The four companies chosen for peer comparison include Abercrombie & Fitch Company (ANF), Aeropostale, INC. (ARO), and GAP, INC. (GPS).
The results show that RL is managing its balance sheet very well; especially in the categories of profitability, capital efficiency, liquidity and financial leverage. The results also show that RL’s operations are running proficiently when viewing the CAGR, Debt/Asset Ratio, and Gross Profit Margin results.
Two areas were highlighted as chances to improve the overall productivity of the company and should be addressed accordingly. The areas include liquidity (quick ratio) and market valuation (market perception based on Price per Earning P/E). Once these areas were improved, the company will not have any significant risks to be concerned about.
By 2013, RL’s ability to quickly use their cash and convert other current assets into cash has decreased by 13.4%, which might put their ability to fulfill their short-term obligations and debts in risk. However, RL is still at top of peers in this area.
During the same year, P/E ratio of RL has decreased by 24%, which indicates that the market has poor expectation of the company’s future earning.
RL depends on department stores in selling their products especially in the US and Canada, which gives them little influence on what these department stores buy and offer their customers, or how they display their products. Also, department stores may force RL to merchandise at lower prices to increase their margin, which consequently effect RL’s revenues and P/E ratio and their liquidity