Financial Analysis of Puma
The report “Financial Analysis of Puma” aims to pay more attention to the business and the transparency of the work, sustainability trends that develop affect the entire growth of the environment and transform the reliable changes in the competent operations.
So, the sales and the growth of Puma have increased due to the use of virtual and augmented reality is an innovative technology that raises the business directions and updates the internal values in the cleared resources.
To raise the business operations and track better thinking, the business descriptions will be transformed. The policy that is concerned with the financial policies regarding the payment of cash dividends in the current year or paying increased dividends at a later stage directly improves the business direction.
Section A:
Development one: Sustainability as a key trend:
Sustainability has already become a key trend in the fashion as well as e-commerce industries that improve the business resources and determine the broad changes. In the fashion industry, e-commerce sustainability provides a lot of opportunities that increase the business directions and take reliable values to take instant directions.
Generating the environmentally friendly operation and the responses of the brands, the overall material, and the production methods will be advanced to help make innovative decisions. To collaborate with the advanced sources and manage the operations, e-commerce sustainability provides greater directions as recorded to interact with the business’s reliable values.
Looking for environmentally friendly and ethical fashion operations, there is a particular outcome that acts as the broad material for business interactions. Consumers of the fashion business are getting more aware of the key impact their purchases have on the entire environment.
So, consumers are looking for brands that focus on the key sustainable practices. Shifting in consumer behaviour drives the brands to adopt eco-friendly practices and determine the broad changes through higher interactions.
Puma company gets more customers after being involved in this trend because all the operations and the core practices of the business will be reliable to achieve the higher goals and interactive to take the business determination.
As a fashion company, the business adds suitability to the entire product that helps to achieve the goals of satisfying the large market and determining the overall era of the business communication. Various functions of the business need to be classified after the determination of the sustainability trends.
This trend will raise the entire practice and manage the cleared resources to take instant directions and communicate with them cleared resources. The company’s value and sustainable efforts directly improve the internal practices to act as reliable sources and manage in competent roles by following the higher directions.
People want clothes that are the most reliable kind to the planet, and in the year 2024, there is going to be the biggest trend that will collaborate with the business operations and generate internal growth values.
Development two: Virtual and Augmented Reality on Puma:
Another trend in the consumer fashion industry is the virtual as well as augmented reality that improves the overall practices and determines the broad changes to collaborate with the clear changes. The resources of virtual and augmented reality will lead the internal growth policies and determine the most updated trend as doing higher innovation.
To collaborate on the business operations and manage the greater experiences, the business operations will be classified as it leads the interactive operations. Taking virtual and augmented reality as advanced technology, the management of the business will classify the higher operations or the broad changes to determine the success.
Puma company, as a fashion brand, uses advanced technology to keep satisfied with their customers satisfied, which is a reliable and valuable practice. Determination of the business practices and managing the internal roles, the business classification will be attached to get instant directions.
Involving the customers in the decisions of the fashion products and giving them proper value, the business plans must be referred to as taking the higher growth practices. To proceed with the valuable operations and generate the internal practices, the business values will be reliable or added to get the reliable changes as doing the instant plans, these particular changes will add to investigate the most important practices.
Puma company’s recent technology dependence directly impacts sales as well as the entire growth that leads to higher success and implementation the greater functions through considerable thinking.
Section B:
Dividend policy and sources of finance: Financial Analysis of Puma
This business collaboration will help get instant directions and add the most valuable resources to take the current effectiveness. For the Puma company, the payout ratio for the financial year 2022 is about 34.7% of the consolidated net earnings.
It is by the PUMA SE’s dividend policy. This policy oversees the payout of 25% to 35% of the consolidated net earnings according to the IFRS. It is a dividend-paying company with a recent yield of 1.75% that is well covered by the earnings.
To reach higher sales and expand the operations of the company, the regular pay dividend policy is effective, but for the entire business descriptions where the lower strategic terms are valuable, the business consolidated net earnings will be impacted.
PUMA is a fashion brand that develops sustainable activities to lead innovative resources and implement the greater directions as doing the implementation terms or the valuable sources.
Sources of finance:
The fashion brand PUMA generates higher finances through the use of different sources that increase the business roles and determine better classifications regarding the changes. So, taking loans from the bank and venture capital are the two key sources used by the PUMA to create a large description of the business and manage the internal approaches towards the business terms.
PUMA is a large fashionable company which is why the overall resources of cash or funds come from the venture capital by talking advice from the investors and the banks that grant the loans either short-term as well s long-term for the convenience of the company and the overall reputation of the business. It is one of the greater fashion brand companies, so the business determines the clear chances of success through the venture capital method.
Cash management and liquidity risks:
PUMA company faced some risks on the interest income at the eyelid which is paid by the company. So, with the development of the entire practices and the broad changes regarding the business operations, the business descriptions will be classified to take the instant roles. Due to the management of cash and the broad liquidity risks, the business interpretation will be classified to act as a clear and reliable opportunity.
The company holds a lower market share that affects the business plans and determines the broad changes regarding consistent values. As the innovative technique and the generation of the business roles, the entire sources of the business descriptions will be defined to take the higher values. Granting the liquidity risks and managing the internal positions, the business adaption can be strongly attached.
Section C:
Gearing ratios
1. Interest Coverage Ratio:
| Formula | 2022 | 2021 |
| Interest coverage | Operating Profit (Earnings from Operations) Interest on Loan (Finance costs) | Operating Profit (Earnings from Operations) Interest on Loan (Finance costs) |
| Operating profits | £640.6 million | £557.1 million |
| Interest on loan | £168.3 million | £81.7 million |
| Interest Coverage calculation | (£640.6)/ (£168.3) | (£557.1)/ (£81.7) |
| Interest Coverage results | 3.8 times | 6.8 times |
The interest coverage ratio indicates that in the year 2021, Puma company generated stronger financial performance compared to the year 2022. PUMA company builds greater values to act in reliable changes and manage the best roles to take innovative directions.
Interest coverage, operating profits, interest on loans, interest coverage calculation, and the interest coverage results show that in the year 2021, the overall coverage results were 6.8 times that was better than the next year. The lower interest on loans and operating profits defines the lower interest coverage results of the PUMA company.
2. Return on Capital Employed (ROCE):
| Formula | 2022 | 2021 |
| Return on Capital Employed | Operating Profit (PBIT) x 100 Total Asset – current liabilities | Operating Profit (PBIT) x 100 Total Asset – current liabilities |
| Operating profit (Earnings from Operations) | £640.6 million | £557.1 million |
| Total Assets | £6,772.7 million | £5,728.3 million |
| Current Liabilities | £2,843 million | £2,164.5 million |
| ROCE calculation | ROCE= (£640.6 *100)/ (£6,772.7-£2,843) | ROCE= (£557.1*100)/ (£5,728.3-£2,164.5) |
| ROCE results | 16.3% | 15.6% |
Based on the return on capital employed as the financial ratio, it is clear that in the year 2021, the financial health of the company was good as compared to the recent year 2022. The operating profit, total assets, and current liabilities are good or effective indicating the business directions and the core reliable operations in the accurate descriptions.
By learning better values and implementing the higher sources, the strategic performance will be transformed. Getting the return on capital and maintaining the business values, the business descriptions will be classified. ROCE in the year 2021 was 15.6% which was better for the retail industry.
3. Operating Profit Margin:
| Formula | 2022 | 2021 |
| Operating Profit Margin | Operating Profit (PBIT) x 100 Total Revenue | Operating Profit (PBIT) x 100 Total Revenue |
| Operating profit (Earnings from Operations) | £640.6 million | £557.1 million |
| Total Revenue | £8,465.1 million | £6,805.4million |
| Operating profit Margin calculation | (£640.6 *100)/ (£8,465.1) | (£557.1 *100)/ (£6,805.4) |
| Operating Profit Margin results | 7.57% | 8.2% |
As the operating profit merging is a financial ratio that directly indicates that in the year 2021, there is a higher financial performance of the Puma company in the year 2021 as compared to 2022. This profit ratio indicates the better practices or taking the higher values in time to address the clear resources. 8.2% of the operating margin indicates that it is one of the best and most reliable years for the financial performance of the PUMA company.
The operating profitless earnings from the entire calculation, the results of operating profit, and the broad valuation of the business as determine the business concepts that will collaborate the higher changes and implement the instant growth for the business resources.
4. Gross Profit Margin:
| Formula | 2022 | 2021 |
| Gross Profit Margin | Gross Profit x 100 Total Revenue | Gross Profit x 100 Total Revenue |
| Gross profit | £3,902.7 million | £3,257.8 million |
| Total Revenue | £8,465.1 million | £6,805.4million |
| Gross Profit Margin calculation | (£3,902.7 *100)/ (£8,465.1) | (£3,257.8 *100)/ (£6,805.4) |
| Gross Profit Margin results | 46.1% | 47.87% |
The gross profit margin is the financial performance indicator that helps to evaluate how much event that helps the company to generate profit. The profile of Puma company on the sales that it is done can be easily understood through the entire practices that will help to take the overall abilities and the catering of the decisions.
By adding the change and generating the internal growth networks, the business concepts will be valued to greater the clear changes and direct the business responses. In the evaluation of gross profit and the management of the business interaction, the firm’s sources will be traced to cater to the instant directions.
5. Inventory Turnover Days:
| Formula | 2022 | 2021 |
| Inventory Turnover Days | Average Inventory x 365 days Cost of sales | Average Inventory x 365 days Cost of sales |
| Average Inventory | £2,245.1 million | £1492.2 million |
| Cost of sale | £4,562.3 million | £3,547.6 million |
| Inventory turnover days calculation | (£2,245.1 *365)/ (£4,562.3) | (£1492.2 *365)/ (£3,547.6) |
| Inventory turnover days results | 179.62 days | 153.5 days |
In the year 2022, the inventory turnover days of the PUMA company are higher affecting the instant directions and the reliable planning of the business. So, the cleared and the determination plans of the business will classify to act as the greater directions.
By adding the broad changes and implementing the higher success, the cost of sale will be used. The average inventory and the cost of sales are higher in the 2022 year which indicates that better inventory turnover days result that are effective or collaborate with the business directions.
6. Receivable Turnover Days:
| Formula | 2022 | 2021 |
| Receivable Turnover Days | Receivables x 365 days Total Revenue | Receivables x 365 days Total Revenue |
| Average receivables | £1,064.9 million | £848 million |
| Total Revenue | £8,465.1 million | £6,805.4million |
| Receivable turnover days calculation | (£1,064.9 *365)/ (£8,465.1) | (£848 *365)/ (£6,805.4) |
| Receivable turnover days results | 45.9 days | 45.5 days |
In the year 2022, the average recyclables of the PUMA company become higher as compared to the previous year. The average receivables rose from 848-euro million to 10649-euro million improving the business resources and generating higher classifications regarding the change., Determination of the business functions and managing the greater conveniences, the cleared resources will be applicable to act in the considered terms.
To take the business effectiveness and manage the broad changes, the firm’s internal environment will be applicable. The average relievable ways of turnover in the year 2022 is 45.9 which was higher than the previous year’s results.
7. Current Ratio:
| Formula | 2022 | 2021 |
| Current Ratio | Current Asset Current Liabilities | Current Asset Current Liabilities |
| Current assets | £4,200.4 million | £3,489.8 million |
| Current liabilities | £2,843 million | £2,164.5 million |
| Current ratio calculation | (£4,200.4)/ (£2,843) | (£3,489.8)/ (£2,164.5) |
| Current ratio results | 1.48:1 | 1.6:1 |
In the year 2022, the PUM company generate higher current assets, current liabilities, and current ratio. That’s why the business is more profitable with the higher financial results. The current sets become raised from 3489.8 to 4200.4 million euros from the year 2021 to 2022.
To get the overall business determination and generate better practices, the business plans will be reliable to take the innovative directions. Collaborating with the business resources and managing the higher sources, the firm’s growth will be attached or it will lead to the internal values. So, the current ratio in the 2022 year is higher or more profitable,
8. Quick Ratio:
| Formula | 2022 | 2021 |
| Quick Ratio | (Curent Asset – inventories) Curent Labilités | (Curent Asset – inventories) Curent Labilités |
| Current assets | £4,200.4 million | £3,489.8 million |
| Inventories | £2,245.1 million | £1492.2 million |
| Current liabilities | £2,843 million | £2,164.5 million |
| Quick ratio calculation | (£4,200.4-£2,245.1)/ (£2,843) | (£3,489.8 -£1492.2)/ (£2,164.5) |
| Quick ratio results | 0.69:1 | 0.92:1 |
By the analysis of current assets, inventory, and current liabilities it is analysed that the quick ratio of the PUMA company will generate instant growth activities. All the practices and the policies of the business that are strongly associated with the relabelling will be analysed to take instant directions.
In the year 2022, the quick ratio was lower as compared to the previous year. Due to the speed of more investment in the inventories, the company’s liquid for the protection of financial performance.
9. Interest Coverage:
| Formula | 2022 | 2021 |
| Interest coverage | Operating Profit (Earnings from Operations) Interest on Loan (Finance costs) | Operating Profit (Earnings from Operations) Interest on Loan (Finance costs) |
| Operating profits | £640.6 million | £557.1 million |
| Interest on loan | £168.3 million | £81.7 million |
| Interest Coverage calculation | (£640.6)/ (£168.3) | (£557.1)/ (£81.7) |
| Interest Coverage results | 3.8 times | 6.8 times |
In the year 2021, the interest coverage ratio of PUMA as a fashion brand was as high as 6.8 times, compared to the year 2022, which was 3.8 times.
So, the higher interest coverage ratio of the PUMA indicates that the company was generating a higher operating profit and getting less interest on the loans that it is taking from the banks, as well as other financial institutions. Taking the loan helps to improve the financial performance, but higher interest rates will affect the yearly growth or net income of the business.
