Finance Report ASOS ESSAY

With a calculate much higher than the sis free rate of return (4%) investors are likely to invest in the company ( chance dissolve Rate Of Return Definition I Investigated, 2003). Return on gross sales Return on sales (ROSS) stands at 8. 59% in 2008 and waistband fairly consistent through to 2009. In 201 0 it growings marginally by 0. 68% to 9. 11%, however falls to 6. 30% by 2012. The purport Return on sales is often around 10% open on the type of industry, so SASS falls be menial the target. barely SASS have a high sales volume, which does not inevitably mean a low ROCK (France, 2013).The grade preceding distinguished 2013 they received 19,372 orders a 43% increase on the previous year. (Sass ply. Results & reports, 2013) vernacular Margin % The gross reach margin in 2008 showed a agreeable 46% however amidst 2008-2011 there is a continuous downfall, with a drop of 7. 23% everywhere the 3 years. Although this increase by 12. 4% in 201 2, the 7. 23% fall in gross pro fit could potentially be catastrophic for a company with low ROSS. only this could be due to a change in the price of raw materials or selling prices. (France, 201 3) Liquidity and gearing Sass current ratio is always between 1. 5-1. 561. that they have not borrowed any money over the 5 year period, so carry a low seek to investors. Therefore even though they are not at the grand ratio of , they have not borrowed any money indicating they have commodity short-term financial strength (LetsLearnFinanceFinance in Simple Terms, 2011) Activity debitor turnover began at 8 old age in 2008, however do a vast improvement in 2009 falling to 2 days and then from 2010-2012 remained at 1 day. Creditor turnover days began at 68 days in 2012 which is fairly high, however this creased to 42 days in 2012.This suggests that SASS have good credit control and a low risk of bad debts as their debtor turnover is always at least 40 days less than their creditor days. (France, 201 3) Stock turnover has increased from 98 days to 121 days from 2008-2012 and body fairly consistent throughout. However due to the seasonal nature of the industry with fashions changing regularly, they should try to decrease their stock turnover days. Employee Ratios Sales per employee started at a commendable IEEE,477 and notwithstanding falling y EYE,801 between 2008-2012, increased to IEEE,835 by 2012.This totals El 27,358 increase in sales per employee over the 5 year period. Profit per employee remains consistent throughout, ranging between EYE,058-EYE,557 an exception being 2011 where it drops drastically to EYE,212. This correlates with the low profit margins and return on sales for the year. Growth ratios From 2008-2009 sales increased by 104% as they entered the market, most likely due to promotion. However the following year it dropped 69% and then increased a steady 1 1 % over the next two years.The operating profit was 100% after the first year and dropped dramatically to -22% in 2011 re sulting in a loss. However this was recovered by 2012 with a 96% growth. To remain sustainable they must try and keep their growth rates consistent. Conclusion The company appears fixed due to their good cash flow. They have a low risk to investors, with high potential returns. SASS have no gearing, which gives them the potential to overstate in the future to remain competitive in such a tough industry. If they were to borrow this would also improve the companys current ratio.