Guizzardi is one of the main Italian producers of synthetic raincoats. It sells two product ranges – the fashion and the classic raincoat – through supermarkets. Most of the Guizzardi workforce is paid the minimum wage.

(a) What is your view on the financial health of Guizzardi?

(b) Would you be of the same opinion if you had carried out an analysis beforehand of the company’s value chain and simulated the impact of a crisis in 2004 (11%
increase in labour costs due to the introduction of a shorter working week with no reduction in wages, 40% rise in cost of raw materials due to the drop in the value of the euro against the dollar and the 2004 hike in the price of oil), with a 17% drop in the price of cotton in 2003.

Transcribed Image Text:

Key figures (m): 2005 2006 2007 Sales 256 326 422 Raw materials used 78 104 143 Personnel cost 102 139 190 Operating income 41 52 59 Net income 23 27 27 30 Shareholders' equity 119 129 152 Net bank borrowings 42 125 150