The 2017 financial statements of LVMH Moet Hennessey-Louis Vuitton S.A. are presented in Appendix C at the end of this book. LVMH is a Parisbased holding company and one of the world's largest and best-known luxury goods companies. As a member of the European Union, French companies are required to prepare their consolidated (group) financial statements using International Financial Reporting Standards (IFRS). After reviewing LVMH's consolidated financial statements, consider the following questions:

a. What is LVMH's second largest asset account on its 2017 balance sheet? What percentage of total assets does this asset represent?

b. Is LVMH principally debt financed or equity financed in 2017? What percentage of LVMH's assets is financed with debt?

c. Is LVMH profitable in 2017? What percentage of the company's sales revenue in 2017 is represented by its "profit for the year," or its net income?

d. How much is LVMH's cash flow from operating activities in 2017? How does LVMH's profit for the year (net income) compare with its cash flow from operating activities?

Appendix C

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CONSOLIDATED INCOME STATEMENT (EUR millions, except for earnings per share! Notes 2017 2016 2015 Revenue Cost of sales 23 42,636 37,600 (14,783) (13,039) 35,664 (12,553) Gross margin 27,853 24,561 23,111 Marketing and selling expenses (16,395] [14,607) [13,830) General and administrative expenses (3.162] (2,931) (2,663) Income (loss) from joint ventures and associates 7 (3) 3 (13) Profit from recurring operations 23-24 8,293 7,026 6,605 Other operating income and expenses 25 (180) (122) (221) Operating profit 8,113 6,904 6,384 Cost of net financial debt (62) (83) (78) Other financial income and expenses (117) (349) (336) Net financial income (expense) 26 (179) (432) [414] Income taxes 27 (2,318) (2,109) [1,969) Net profit before minority interests Minority interests Net profit, Group share Basic Group share of net earnings per share (EUR) Number of shares on which the calculation is based Diluted Group share of net earnings per share (EUR) Number of shares on which the calculation is based 5,616 4,363 4,001 17 (487) (382) (428) 5,129 3,981 3,573 28 28 10.21 7.92 7.11 502,412,694 502,911,125 502,395,491 28 10.18 504,010,291 7.89 504,640,459 7.08 504,894,946