Ratio analysis
When evaluating the performance of ORL, financial ratio from different aspects will be considered together.
1. Profitability
1.1 ROE
ROTON’s ROE has experienced fluctuation through the three financial years. The highest value represented the amount of 84.9% in 2011; on the other hand, the lowest value pointed 66.5% in the last financial year. The ROE of OROTON is sliding from 2011 to 2013. The downward trend indicates the management of ORL might not well manage the profits based on the owners’ investment in the company. The company’s ability to maintain a positive profit trend is also falling from 2011 to 2013.It must be remembered the average company performance is about 15%. Consequently, though the ROE is dropping considerably, OROTON is still spending wisely and profitably than its competitors. The main reason for the great slump is to give away excessive discounts on Ralph Laurance brand when ending the license agreement in FY 2013. For OROTON, it is a matter of keeping vigilant that brand loss might destroy ROE permanently and the promotion discount manner might cause further …show more content…
In 2013, the positive trends in some ratios are reversed. The growth in EPS is interesting given the profit margin is decreasing from 2012 to 2013.The EPS has gone from 60.77 cents in 2011, 60.99 cents in 2012 to 67.15 cents in 2013. It must be remembered the revenue is increasing during the three years. Consequently, any ratio that involves the number of revenue in the dominator will increase all else being equal. the gross cash flow per share is higher than the EPS, but the gross cash flow per share may not be restricted to operating cash flow only. Cash flow ratios are also generally higher than profit-based ratios because cash flows do not include depreciation and amortization, as there are non-cash flow
When evaluating the performance of ORL, financial ratio from different aspects will be considered together.
1. Profitability
1.1 ROE
ROTON’s ROE has experienced fluctuation through the three financial years. The highest value represented the amount of 84.9% in 2011; on the other hand, the lowest value pointed 66.5% in the last financial year. The ROE of OROTON is sliding from 2011 to 2013. The downward trend indicates the management of ORL might not well manage the profits based on the owners’ investment in the company. The company’s ability to maintain a positive profit trend is also falling from 2011 to 2013.It must be remembered the average company performance is about 15%. Consequently, though the ROE is dropping considerably, OROTON is still spending wisely and profitably than its competitors. The main reason for the great slump is to give away excessive discounts on Ralph Laurance brand when ending the license agreement in FY 2013. For OROTON, it is a matter of keeping vigilant that brand loss might destroy ROE permanently and the promotion discount manner might cause further …show more content…
In 2013, the positive trends in some ratios are reversed. The growth in EPS is interesting given the profit margin is decreasing from 2012 to 2013.The EPS has gone from 60.77 cents in 2011, 60.99 cents in 2012 to 67.15 cents in 2013. It must be remembered the revenue is increasing during the three years. Consequently, any ratio that involves the number of revenue in the dominator will increase all else being equal. the gross cash flow per share is higher than the EPS, but the gross cash flow per share may not be restricted to operating cash flow only. Cash flow ratios are also generally higher than profit-based ratios because cash flows do not include depreciation and amortization, as there are non-cash flow