'Financial Analysis of Victoria Secret Essay\r'

'INCOME description ANALYSIS\r\ncapital of Seychelles unknown appears to be a cabbage qualified conjunction. capital of Seychelles concealed is sidetrack of L Brands whose run income was at $ 211 cardinal, up by $24 million from the travel quarter. Specifically at capital of Seychelles’s whodunit, sales increased by 4% to reach 5.4 cardinal only when operating(a) income fall by 6% to 1.71 billion. It appears that capital of Seychelles cryptical’s major expense was their Cost of Goods sell, COGS, which totaled at 1.3144 billion. The gross boodle pct as at February 2013 was 47.87% (NASDAQ, 2014).\r\nBALANCE SHEET ANALYSIS\r\nAssets of capital of Seychelles’s obscure befuddle steadily increased in the last three fiscal years. As at November 2013, return on Assets was at 12.73% up from 12.2% in January 2013. Return on equities has been high as wholesome, at 105.39% in January 2012, up from 44% in 2011. Liabilities prepare in like manner sadly in creased in the last four years. Expenses keep increased from $630 million in August 2013 to $645 million in November 2013 (L Brands, 2014). The Cost of Goods Sold has decreased however, from $1.527 billion in August 2013 to $1.314 billion in November 2013. Total liabilities were at $7.456 billion in November 2013, up from $6.933 billion in August 2013 (NASDAQ, 2014).\r\n didactics OF STOCKHOLDER’S EQUITY\r\nRetained salary were in the banishs for capital of Seychelles’s Secret stockholders. As at November 2013 it was -$519 million. Common stock was at $153 million still treasury stock was at a negative of -$740 million (NASDAQ, 2014).\r\nSTATEMENT OF CASH FLOWS\r\nThe concluding hard hard cash provided as a issuance of operating activities as at January 2014was at 1.279 billion dollars, dapple the net cash provided as a result of expend activities at -$106 million (L Brands, 2014). The net cash provided as a result of financing activities was also at a negati ve at -$78 million. The negative cash flows brought approximately by investing and financing activities imply that they have woo the federation much currency in their undertaking than they have brought in. However, the large cash flows brought in by operating activities are more(prenominal) than sufficient to overlie the losings brought about by the other categories, so the negative cash flows do non worry me overly much.\r\nFINANCIAL RATIO ANALYSIS\r\nAfter conducting the monetary ratios for capital of Seychelles Secrets, it is clear to me that they are able to assemble consumer demands while maintaining monetary stability. Their Liquidity Measures ratios suggests that the company is able to adequately remuneration for the liabilities while investing assets in a st measuregic manner. Net Working large(p) to Total Assets results show that capital of Seychelles Secret is able to efficiently turn assets and cover short-term liabilities. The company is in fair health, h owever there is a decline in 2011-2013, suggesting a slight stretch forth turning their assets into cash fast enough to cover their liabilities. For their collection period it takes about 7-8 days for capital of Seychelles Secret to collect cash, meaning that they collect cash quickly for reinvestment purposes. capital of Seychelles Secret depletes and replenishes their inventory at least five times per year to accomplish their consumer demand.\r\nFixed Asset Turnover for Victoria Secret proves that they are able to use their fixed assets in effect towards sales tax incomes. They are able to generate $4 to $5 of sales for every $1 that is invested in fixed assets. Their debt/leverage measures the low debt to total asset ratio implies that Victoria Secret assets are financed more through equity rather than debt and that they are apply a conservative capital structure; ultimately, by keeping their debts low and manageable, they have a pecuniary advantage. However, Victoria Secret whitethorn not be taking advantage of their increase utilitys that comes with monetary advantage.\r\nVictoria Secret’s gross profit margin is above industry norms, indicating that Victoria Secret is generating strong sales prices that are relative to their cost of goods sold. Victoria Secret’s operating profit margin ratio shows that they have complete and potent control of their operating costs, however their sales could be increasing faster than their operating costs. The net profit margin ratios suggests that Victoria Secret has a any(prenominal) cushioning that leave behind help protect them in case of hard times. Victoria Secret is efficaciously managing and turning assets into generating earnings and income on red-hot investments. Victoria Secret makes at least $2.50 per share and is generating a signifi appriset dividend for their investors, which leads investors anticipating a higher future increase.\r\ngross revenue FORECASTING\r\nDuring per airing th e sales forecast for Victoria’s Secret, I learned that for most part that Victoria’s Secret has an incline in their profits. They have however hit a few bumps here and there. The causes of this could be more cost for Victoria’s Secret purchasing materials and production of their products. some other reason for this could also be a sulky rate in sales than usual. Like I said, for the most Victoria Secret has seen an incline in their profits and sales throughout the years.\r\nPerforming the shareage of sales forecast for Victoria’s Secret, I established a forecasted sales of 5 percent which means that they would have to have a sales of $2,808 compared to their last years $2,675. This is a very viable number for Victoria Secret to achieve, considering that majority of their money in assets outweighs their liabilities. The EFN, international Financing Needed, for Victoria Secret is $2,855. This indicates that Victoria Secret would need to obtain External Financing Needed to achieve the $2,808 forecasted sales level, which 5% more of their current sales revenue.\r\nSUBSTANTIAL increase RATE ANALYSIS\r\nVictoria Secret has had a steady maturation over the analyzed period. It has not been similarly slow or as well as fast, but one that shows that they are adequately handling the reformist growth of the company. This shows that Victoria Secret is paying last attention to all details of the judicature.\r\nCONSEQUENCES FACED BY FIRMS THAT GROW AT A RATE THAT IS not CONSISTENT WITH THEIR SUSTAINABLE RATE\r\nGrowing too fast as crazy as it may sound, does have potential consequences for the organizations. These consequences could come in the form of the organization not being able to reach customer demand, hire and/or train heart-to-heart employees to accommodate for the growth, and herculeany in obtaining cash to complement the growth. When an organizations too fast it will need more capital to support the growth. On the rever se side, a growth too slow cornerstone be as destructive as growing too fast.\r\nSlow growth can have the consequences of wanting(p) or needing to expand their organization, however if they do learn to expand without the support of a sufficient revenue; then the organization runs into potential trouble with investors. If Victoria Secret grew at a rate where it was difficult for them to be consistent with their sustainable rate, then they would have either to find additional funding or consider eliminating some of their debt.\r\nIF THE FIRM GREW AT A RATE ABOVE OR BELOW THE SGR, HOW DID IT pay ITS EXCESSIVE GROWTH OR REWARD ITS STOCKHOLDERS FOR THE UNDERPERFORMANCE\r\nSince Victoria Secret has a sustainable growth rate that is steady, they did not need to finance an excessive growth or reward their stockholders for an underperformance. Victoria Secret’s continued growth and success will guess on their ability to open and operate sassy stores and to expand and even remode l existing stores in a manner that is not only by the way but also on a juicy basis. Accomplishing their raw(a) and existing store expansion goals will depend upon a number of factors, including their ability to assemble with developers in order to obtain suitable sites for new and expanded stores, the hiring and training of qualified personnel, and the integration of new stores into existing operations. However, there are risks associated with these growths, which could be having a negative effect on their results of operations, pecuniary term and cash flows.\r\nFINAL ANALYSIS\r\nUpon my initial analytic thinking on the financial performance of Victoria Secret, I assumed that were a profitable company. After do the financial ratios analysis, forecast of sales analysis, and the substantial growth analysis; my assumption proved to be correct. Victoria Secret proves to be the most profitable line of work owned by L Brands. Granted Victoria Secret has had their fair share of b umps in the road, but because of their strategic financial plan, those bumps did not have a great deal of import financial for them.\r\nWhat I have learned from doing the financial analysis on Victoria Secret is that they are an organization who takes sagacious their financial performance seriously. They know, understand, and most importantly can successfully create financial strategic plans can serves as a tool for their success, as well as prepare them in case of a â€Å" showery day”. This is where majority of organizations fail in performing a financial analysis and preparing a financial strategic plan. Most organizations do not want to opine or even hold to the potential of having a â€Å"rainy day”, because in their eyes it sets them up for failure. Victoria Secret apparently knows the importance of embracing the idea of a â€Å"rainy day” and prepares for it, which is one of the many reasons they are such(prenominal) a successful organization.\r\nCond ucting the financial analysis on Victoria Secret also proves that my prediction about how they are able to turn assets into income to can pay for their liabilities as well as have enough left over to reinvest back into the organization. Victoria Secret clearly understands that growth is crucial for the success of the organization while at the same keeping their growth maintainable without getting themselves into financial trouble. It is clear that Victoria Secret knows the importance of knowing how to do a financial analysis of their organization’s financial performance and using the analysis to build a strategic financial plan. I do believe that if Victoria Secret keeps a diligent piquet on their financial performance and does regular financial analysis, they can continue to be a draw and quarter to be reckoned with that they have been in the retail industry.\r\nReferences\r\nBaral, S. (2013). _The repugn of Attaining Sustaintable Growth ._ Retrieved from http://prj.co.in /setup/business/paper77.pdf\r\n line Town. (2003). _Pro Forma isotropy Sheets._ Retrieved from http://www.businesstown.com/accounting/projections-balance.asp\r\nBusiness Town. (2003). _Pro Forma Income Statements._ Retrieved from http://www.businesstown.com/accounting/projections-statements.asp\r\nHoovers. (2014). _Victoria’s Secret Stores, LLC. ._ Retrieved from http://www.hoovers.com/company-information/cs/competition.Victorias_Secret_Stores_LLC.d793812b13b17deb.html\r\nL Brands. (2014). _Financials._ Retrieved from http://www.lb.com/investors/financial_information/financials.aspx\r\nL Brands. (2014). _SEC Filings._ Retrieved from http://www.lb.com/investors/company_info/sec_filings.aspx\r\nLane, M. (2014). _Percentage of Sales Method._ Retrieved from Business Finance Online: http://www.zenwealth.com/businessfinanceonline/FF/PercentageOfSales.html\r\nLutz, A. (2013). _Why The Lingerie Industry Can’t Compete With Victoria’s Secret._ Retrieved from http://www.b usinessinsider.com/victorias-secret-will-beat-competition-2013-9\r\nNASDAQ. (2014). _L Brands, Inc. Stock Report._ Retrieved from http://www.nasdaq.com/ symbolization/lb/stock-report\r\n'