| Nr. |
Chapter |
Page. |
| |
EXECUTIVE SUMMARY |
i |
| 1. |
Introduction |
1 |
| 2. |
Methodology |
2 |
| 3. |
Ratio analysis |
3 |
| 3.1. |
Debt ratios |
3 |
| 3.1.1. |
Debt ratio |
3 |
| 3.1.2. |
Debt to equity ratio |
4 |
| 3.2. |
Liquidity ratios |
5 |
| 3.2.1. |
Current ratio |
5 |
| 3.2.2. |
Quick (acid – test) ratio |
6 |
| 3.3. |
Activity ratios |
6 |
| 3.3.1. |
Inventory turnover |
7 |
| 3.3.2. |
Average collection period |
8 |
| 3.4. |
Profitability ratios |
8 |
| 3.4.1. |
Return on total assets |
9 |
| 3.4.2. |
Return on equity |
9 |
| 3.5. |
Market ratios |
10 |
| 3.5.1. |
Price/Earnings ratio |
11 |
| 3.5.2. |
Market/Book ratio |
12 |
| 4. |
Working Capital Management |
13 |
| 4.1. |
Cash Conversion Cycle |
13 |
| 4.2. |
INDITEX Cash Conversion Cycle timeline for 2020 |
13 |
| 4.3. |
Comparison of INDITEX and its competitors’ CCC |
14 |
| 4.3.1. |
Average Age of Inventory |
14 |
| 4.3.2. |
Average Collection Period |
15 |
| 4.3.3. |
Average Payment Period |
15 |
| 4.3.4. |
Cash Conversion Cycle |
16 |
| 4.4. |
The impact of inbound logistics on CCC |
16 |
| 4.4.1. |
EOQ (Economic Order Quantity) |
16 |
| 4.4.2. |
JIT (Just in Time) |
17 |
| 4.4.3. |
MRP (Materials Requirement Planning) |
17 |
| 4.5. |
INDITEX CCC experience |
17 |
| 4.6. |
The impact of the proposed strategy |
18 |
| 5. |
Capital structure |
19 |
| 5.1. |
Debt |
19 |
| 5.2. |
Equity |
19 |
| 5.2.1. |
Stock valuation |
19 |
| 5.3. |
Optimal capital structure |
19 |
| 5.4. |
Cost of capital |
20 |
| 5.5. |
Leverage |
21 |
| 5.5.1. |
Operating leverage |
21 |
| 5.5.2. |
Financial leverage |
21 |
| 6. |
Bonds and stocks |
23 |
| 7. |
Commentary on the news article |
24 |
| 7.1. |
Impacts on the financial state of INDITEX |
24 |
| 8. |
Conclusion |
26 |
| 9. |
Recommendations |
27 |
| 9.1. |
Financial Perspective. ROE |
27 |
| 9.2. |
Financial Perspective. ROA |
27 |
| 9.3. |
Customer Perspective |
27 |
| 9.4. |
Internal Business / Learning and Growth Perspectives |
28 |
| |
Reference list |
29 |
| |
Appendices |
36 |
| |
APPENDIX A: Consolidated statements |
36 |
| A.1. |
Consolidated statements of INDITEX |
36 |
| A.2. |
Consolidated statements of Fast Retailing Co |
40 |
| A.3. |
Consolidated statements of H&M |
44 |
| A.4. |
Consolidated statements of GAP Inc |
49 |
| |
Appendix B: Calculations of ratios |
53 |
| B.1. |
Calculations of INDITEX ratios for a period 2018-2020 |
53 |
| B.2. |
Calculations of Fast Retailing Co. ratios for a period 2018 - 2020 |
54 |
| B.3. |
Calculations of GAP Inc. ratios for a period 2018-2020 |
56 |
| B.4. |
Calculations of H&M ratios for a period 2018-2020 |
58 |
| |
Appendix C: Calculations of cash conversion cycle for 2020 |
60 |
| |
Appendix D: Calculations of the degree of financial and operating leverage for 2020 |
61 |
| |
Appendix E: Article that impacts the financial performance of INDITEX |
62 |
| |
Appendix F: Industry analysis |
64 |
| F.1. |
Porter`s Five Forces analysis |
64 |
| F.2. |
SWOT Analysis of INDITEX |
64 |
