Adidas ag has seen in the bottom line with a high

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Adidas AG has seen in the bottom line with a high shrink despite of their increase in revenues. An increase in the percentage of sales devoted to income tax expenses from 1.96% to 2.20% was a key component in the falling bottom line in the face of rising revenues. At the end of December 2011, total assets increased 27 percent, which was primarily due to an increase in current assets. Accounts receivables increased 30 percent while accounts payable went up 45 percent reflecting the growth in inventories compared to the prior year. Fixed assets including property, plant and equipment, goodwill, and other intangible assets as well as long-term financial assets increased 26 percent. Common equity increased 36 percent; the net income generated during the last year and the increase in the fair value of finances was the main contributors to this development. The Group’s equity ratio at the end of December 2011 was 14 percent higher compared to the prior year. We have gathered all of the information from the financial reports of each company and summarized each company’s financial positions. Below we are going to compare the financial ratios of each company: 42
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Polo Ralph Lauren (A) Nike (B) Adidas © 2010 2011 1) Profit Margin Ratio (A) 10% (B) 10 % (C) 4.70% (A) 10% (B) 10% (C) 4.60% 2) Asset Turnover (A) 1.03 (B) 1.32 (C) 1.1 (A) 1.17 (B) 1.39 (C) 1.2 3) Return on Assets (A) 10% (B) 13% (C) 5.20% (A) 12% (B) 14% (C) 5.60% 4) Return on Common Stockholders’ Equity (A) 488% (B) 392% (C) 12% (A) 601% (B) 449% (C) 13% 43
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5) Current Ratio (A) 3.05 (B) 2.26 (C) 1.5 (A) 2.98 (B) 2.85 (C) 1.5 6)Debt to Total Asset Ratio (A) -.14 (B) .01 (C) .13 (A) -.18 (B) .03 (C) .09 Now that we have our comparison chart it is time to explain what these numbers actually represent. Profit margin ratio is a profitability ratio which compares components of income with sales. It shows what makes up the companies income. This ratio represents how much of every dollar of sales is left after cost of goods sold. Asset turnover is the amount of sales generated for every dollar's worth of assets. It can be used to evaluate the benefit of the product. Asset turnover ratio indicates the ability of the company’s management to put the fixed asset to work to generate sales. Return on assets is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. Return on common stockholders’ equity is the amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. Current ratio is a liquidity ratio which provides a measure of a company’s ability to generate cash to meet is company needs. Current ratio indicates a company’s ability to satisfy is current liabilities with its current assets. Debt to total asset ratio is a metric used to measure a company's financial risk by determining how much of the company's assets have been financed by debt (Investopedia, 2013).
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