Burberry's Financial Ratio Analysis

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Financial ratios are the best way to understand and analyse the health of a company. ASOS with revenue of £1 billion in 2015 is one of the most popular online retail web sites, offering more than 80,000 branded and delivering for almost every country in the world (ASOS, 2015 pp2). In the other side, Burberry with 160 years and a revenue of £2.5 billion is one of the classic British luxury brands and keep its goals on continue the valorisation of its brand and keep as one of the strong luxury brand in the global market (Burberry, 2015).This report will demonstrate and compare a range of 9 ratios for Burberry and ASOS. Then, the goal of this report is analysing the finance ratios of those companies, giving recommendations and see if both have a health financial business.
2. Profitability Ratios ASOS BURBERRY 2015 2014 2015 2014 Table1 : Profitability ROSF 16% 19% 23% 28% ROCE 20% 24% 28% 33% Gross profit margin 50% 50% 70% 71% Operating Profit margin 4% 5% 17,5% 19%

The profitability ratios on both companies demonstrate a decrease on almost all of them. In ASOS 's ROSF (Return on shareholders’ funds) the shareholders were achieving £0.19 on its returns but in 2015 had a decrease of 3% becoming £0.16. In addition, in Burberry’s ROSF ratio had a decrease of 5 %, from £0.28 to £0.23. The ROCE
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Conclusion
In conclusion, ASOS and Burberry have similar situation of decrease on their profitability ratios, and is recommend try manage better their costs and operations for improve their profitability. In the others ratios, both companies have demonstrated different situations. Thus, is recommend that ASOS should improve its liquidity for the low ratios presented, and Burberry should manage better its efficient ratios such as controlling inventory turnover, minimize the numbers of days to receive and rise the numbers of days to pay. Finally, both companies demonstrated a health financial

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