Burberry Group (BRBY), a globally recognized luxury fashion house, has a long and rich history. Analyzing its financial performance requires a comprehensive examination of key ratios and metrics over time. This analysis will explore various financial ratios, drawing insights into Burberry's profitability, liquidity, solvency, and efficiency, offering a holistic view of its financial health and future prospects. While specific numerical data for the requested years (2012, 2013) is unavailable publicly without access to premium financial databases like Bloomberg or Refinitiv, we will utilize a generalized framework to demonstrate how such an analysis would be conducted. This framework can then be applied using the actual figures obtained from reliable sources.
Burberry Group Ratios and Metrics:
A robust ratio analysis of Burberry should encompass a wide range of metrics categorized into several key areas:
* Profitability Ratios: These ratios assess the company's ability to generate profits from its operations. Key ratios include:
* Gross Profit Margin: (Revenue - Cost of Goods Sold) / Revenue. This indicates the profitability of Burberry's products after accounting for direct costs. A higher margin suggests better pricing power and efficient cost management.
* Operating Profit Margin: Operating Profit / Revenue. This reveals the profitability of Burberry's core operations after deducting operating expenses. A high margin indicates efficient operations and strong pricing strategies.
* Net Profit Margin: Net Profit / Revenue. This is the ultimate measure of profitability, reflecting profits after all expenses, including interest and taxes. It shows the percentage of revenue that translates into net profit.
* Return on Equity (ROE): Net Profit / Shareholders' Equity. This measures the profitability generated on the shareholders' investment. A higher ROE implies efficient use of equity capital.
* Return on Assets (ROA): Net Profit / Total Assets. This ratio indicates how effectively Burberry utilizes its assets to generate profits. A higher ROA suggests better asset management.
* Return on Investment (ROI): Net Profit / Total Investment. This measures the overall return generated on the total investment made in the business. Different methods for calculating total investment exist, leading to variations in ROI calculation.
* Liquidity Ratios: These ratios assess Burberry's ability to meet its short-term obligations. Key ratios include:
* Current Ratio: Current Assets / Current Liabilities. This indicates Burberry's ability to pay its short-term debts with its short-term assets. A ratio above 1 generally suggests good liquidity.
* Quick Ratio (Acid-Test Ratio): (Current Assets - Inventory) / Current Liabilities. This is a more stringent measure of liquidity, excluding inventory, which might not be easily converted to cash.
* Cash Ratio: (Cash + Cash Equivalents) / Current Liabilities. This is the most conservative liquidity ratio, focusing solely on the most liquid assets.
* Solvency Ratios: These ratios assess Burberry's ability to meet its long-term obligations. Key ratios include:
* Debt-to-Equity Ratio: Total Debt / Shareholders' Equity. This indicates the proportion of financing from debt relative to equity. A high ratio suggests higher financial risk.
* Times Interest Earned Ratio: Earnings Before Interest and Taxes (EBIT) / Interest Expense. This shows Burberry's ability to cover its interest payments from its earnings. A higher ratio indicates lower financial risk.
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