We Thcrease in the quisition of a 29.9 percent stake in Tele Atlas have or as have on the components of Tom' 1 Summarize IME pany's ROE in 2008. What effect did the acquisition of ROE in 2007? What effect did the acquisition of in 2008? quisition of a majority stake in Tele Atlas have on the component the components of TomTomister 3 Ratios of three fashion retailers Problem 3 Ratios of the set of financial ratios for the years 2008-2011 of three European fa ad Etam Group, and UK-based French Connection. Using this se e information about these three retailers is available on an fashion de in this set i ilers' financial performance. (Note: More information about these Exhibit P3 displays a selected set of financ Italy-based Benetton Group, France-based Etam Gron analyze the retailers' financial companion website to this book.) 1 VROE) decomposition shows that the underlying drivers of ROE performance va actors may explain these differences in the components of ROE! retailers. Which economic or strategic factors may explain these differences in the co trends (during the period 2008 to 2011) differ among the three retailers? Which face The return on equity (ROE) decompositions 2 How did performance trends (during the period 2008 contributed most to these differences? 2008 2009 2011 2010 2010 2009 2008 2011 2011 2010 Line items as a percentage of sales -25% -2525 2005 2 2 Operating expense line items as a percent of sales Personnel expense Cost of materials Depreciation and amortization Other operating income/expense -12.00 469% -100% 17.6% -12.46 -12.40 47.6% 47.3% 10.7% 10.7% -17.4% -16.5% -19.5% 10 94% - 25.2% -205 -20% -190 -10 2 85 51 9.25 10.15 1 -245 25.0 23 -20.1% -42.24 100% 24,0% -12.7% -50.49 -10.9% -16.5% . 0 0 Eram Benetton 2011 2010 $21 38 99 113 39 94.3% 2.57 200 Asset management ratios Operating working capital Sales Net non-current assets/Sales PP&E/Sales Operating working capital turnover Net non-current asset turnover PP&E turnover Trade receivables turnover Days' receivables Inventories turnover Days' inventories Trade payables turnover Days' payables 0.88 1.06 2.41 149.5 3.12 115.3 en com 2009 2008 2011 2010 2009 2008 2011 2010 2009 2008 37.7% 36 3% 78% 54% 7,5% 959 183 1635 22 23 112.2% 104.3% 51.3% 52.3% 56.0% 59.3% 23% 83% 78 .0 91.8% 84.8% 36,3% 37.2% 38.8% 41.1% 59.6% 56,2% 75.25 5475 265 2.76 12.84 18.43 13.19 10.37 545 5.12 401 0.89 0.96 1.95 1.91 1.79 1.69 161 145 27 115 1.09 1.18 2.75 2.69 2.58 244 168 151131155 2.61 2.91 14.81 17.17 18.05 18.97 21.43 25.45 1950 1734 137.7 123.7 24.3 21.0 19.9 19.0 168 141 18.5 202 2.94 2.87 2.38 2.45 2.61 2.57 2.56 2.55 209 125.4 1514 146.5 137.9 140.3 140 4 141,5 1800 1720 2.37 2.30 2.39 2.49 2.43 4.39 5.47 262 5.20 658 692 1480 156.6 1522 820 137,6 77.1 150.8 144,6 152.2 36 9% 111.99 92.4% 2.71 0.89 1.08 2.59 138.9 3.29 109.3 2.31 155.7 155.7 4.67 122.5 2.16 166.7 Income statement Balan Net per Profit Inne Proc Intar u panty performance the drivers of the cor three years, Fiat came The following table 5 percent in one week Fat's cociding) facturer to re- wald get access to Chr decided to help me chod bankruptcy and Profit fr Income Profit bet Result from Financial in Operating Other unusu Restructuring Gains dosses) Trading profi Other income Research and de Selling general Cost of sales Net revenues 053 ROE? hich factors vary across lable on the of ratios on retailen: Tom's ROE LYSIS Tom Tom's in the com 200 2011 2010 2008 2009 2010 2011 AUT 175 9.06 2.1% 0.91 3.0% 40% 0110.10 000 ROE decomposition Net operating profit margin 5.8% x Operating asset turnover - Return on operating assets Return on operating assets Operating aetlusiness asse + Return on investment assets 1.7 investment asset Business assets) 0.01 Return on business assets 3.7% Spread 12% x Financial leverage - Financial leverage gain 1.4% ROE Return on business assets + financial leverage gain 5.1% 70% 77% 0.67 0.67 0.71 1.59 173 75 70% 35% 07 08 0.97 97 97 0.396 2.99 1.2% -0.8% -64% 0.03 0.02 51 229 2.6% 3.6% 0.7% 20% 1.13 121 1.20 1.35 1.05 24% 32% 095 2.1% 70% 83% 11,1% 4.6% 74% -5.3% 76% 52% 20% 0 .86 17% 39 0.3% 0.91 0.2% 0.9% 154 ANALYSIS AND VALUATION TOOLS 6.1% 4.19% 6.9% -10.6% -14.8% 12.2% French Connection Etam Benetton Line items as a percentage of sales Sales 2011 100.0% -90.6% -0.6% 8.8% 0.0% 0.1% -3.19% -2.1% Net operating expense Other income/expense Net operating profit before tax Investment income Interest income Interest expense Tax expense Net profit 2010 100.0% -88.0% -1,0% 11.0% 0.1% 0.1% -2896 3.29 2008 1000% 86.5% 0.1% 13.6% 0.0% 0.1% -3.7% 2009 100.0% -86.9% - 1.2% 11.9% 0.1% 0.0% -30% 2011 100.0% -96.3% 0.5% 3.2% 0.0% 0.0% -1.6% -0.4% 2010 2009 2008 2011 2010 2009 2008 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100% -94.8% -- 94.4% -94.5% -95.6% -953% -972% -1013% -0.5% -1.1% -0.7% 0.3% 16% -34% 40% 4.7% 44% 48% 46% 54% 06% 53% 0.2% 0.1% 0.0% 0.4% 0.7% 02% 0.1% 0.0% 0.0% 0.1% 0.1% 0.1% 0.0% 0.5% -1.5% -1.5% -18% -28% -30' 38% -09% -0.4% 1.5% -0.2% 0.1% 0.1% 22% 24% 15% 2.1% 4,1% 13% 6.6% 7.3% We Thcrease in the quisition of a 29.9 percent stake in Tele Atlas have or as have on the components of Tom' 1 Summarize IME pany's ROE in 2008. What effect did the acquisition of ROE in 2007? What effect did the acquisition of in 2008? quisition of a majority stake in Tele Atlas have on the component the components of TomTomister 3 Ratios of three fashion retailers Problem 3 Ratios of the set of financial ratios for the years 2008-2011 of three European fa ad Etam Group, and UK-based French Connection. Using this se e information about these three retailers is available on an fashion de in this set i ilers' financial performance. (Note: More information about these Exhibit P3 displays a selected set of financ Italy-based Benetton Group, France-based Etam Gron analyze the retailers' financial companion website to this book.) 1 VROE) decomposition shows that the underlying drivers of ROE performance va actors may explain these differences in the components of ROE! retailers. Which economic or strategic factors may explain these differences in the co trends (during the period 2008 to 2011) differ among the three retailers? Which face The return on equity (ROE) decompositions 2 How did performance trends (during the period 2008 contributed most to these differences? 2008 2009 2011 2010 2010 2009 2008 2011 2011 2010 Line items as a percentage of sales -25% -2525 2005 2 2 Operating expense line items as a percent of sales Personnel expense Cost of materials Depreciation and amortization Other operating income/expense -12.00 469% -100% 17.6% -12.46 -12.40 47.6% 47.3% 10.7% 10.7% -17.4% -16.5% -19.5% 10 94% - 25.2% -205 -20% -190 -10 2 85 51 9.25 10.15 1 -245 25.0 23 -20.1% -42.24 100% 24,0% -12.7% -50.49 -10.9% -16.5% . 0 0 Eram Benetton 2011 2010 $21 38 99 113 39 94.3% 2.57 200 Asset management ratios Operating working capital Sales Net non-current assets/Sales PP&E/Sales Operating working capital turnover Net non-current asset turnover PP&E turnover Trade receivables turnover Days' receivables Inventories turnover Days' inventories Trade payables turnover Days' payables 0.88 1.06 2.41 149.5 3.12 115.3 en com 2009 2008 2011 2010 2009 2008 2011 2010 2009 2008 37.7% 36 3% 78% 54% 7,5% 959 183 1635 22 23 112.2% 104.3% 51.3% 52.3% 56.0% 59.3% 23% 83% 78 .0 91.8% 84.8% 36,3% 37.2% 38.8% 41.1% 59.6% 56,2% 75.25 5475 265 2.76 12.84 18.43 13.19 10.37 545 5.12 401 0.89 0.96 1.95 1.91 1.79 1.69 161 145 27 115 1.09 1.18 2.75 2.69 2.58 244 168 151131155 2.61 2.91 14.81 17.17 18.05 18.97 21.43 25.45 1950 1734 137.7 123.7 24.3 21.0 19.9 19.0 168 141 18.5 202 2.94 2.87 2.38 2.45 2.61 2.57 2.56 2.55 209 125.4 1514 146.5 137.9 140.3 140 4 141,5 1800 1720 2.37 2.30 2.39 2.49 2.43 4.39 5.47 262 5.20 658 692 1480 156.6 1522 820 137,6 77.1 150.8 144,6 152.2 36 9% 111.99 92.4% 2.71 0.89 1.08 2.59 138.9 3.29 109.3 2.31 155.7 155.7 4.67 122.5 2.16 166.7 Income statement Balan Net per Profit Inne Proc Intar u panty performance the drivers of the cor three years, Fiat came The following table 5 percent in one week Fat's cociding) facturer to re- wald get access to Chr decided to help me chod bankruptcy and Profit fr Income Profit bet Result from Financial in Operating Other unusu Restructuring Gains dosses) Trading profi Other income Research and de Selling general Cost of sales Net revenues 053 ROE? hich factors vary across lable on the of ratios on retailen: Tom's ROE LYSIS Tom Tom's in the com 200 2011 2010 2008 2009 2010 2011 AUT 175 9.06 2.1% 0.91 3.0% 40% 0110.10 000 ROE decomposition Net operating profit margin 5.8% x Operating asset turnover - Return on operating assets Return on operating assets Operating aetlusiness asse + Return on investment assets 1.7 investment asset Business assets) 0.01 Return on business assets 3.7% Spread 12% x Financial leverage - Financial leverage gain 1.4% ROE Return on business assets + financial leverage gain 5.1% 70% 77% 0.67 0.67 0.71 1.59 173 75 70% 35% 07 08 0.97 97 97 0.396 2.99 1.2% -0.8% -64% 0.03 0.02 51 229 2.6% 3.6% 0.7% 20% 1.13 121 1.20 1.35 1.05 24% 32% 095 2.1% 70% 83% 11,1% 4.6% 74% -5.3% 76% 52% 20% 0 .86 17% 39 0.3% 0.91 0.2% 0.9% 154 ANALYSIS AND VALUATION TOOLS 6.1% 4.19% 6.9% -10.6% -14.8% 12.2% French Connection Etam Benetton Line items as a percentage of sales Sales 2011 100.0% -90.6% -0.6% 8.8% 0.0% 0.1% -3.19% -2.1% Net operating expense Other income/expense Net operating profit before tax Investment income Interest income Interest expense Tax expense Net profit 2010 100.0% -88.0% -1,0% 11.0% 0.1% 0.1% -2896 3.29 2008 1000% 86.5% 0.1% 13.6% 0.0% 0.1% -3.7% 2009 100.0% -86.9% - 1.2% 11.9% 0.1% 0.0% -30% 2011 100.0% -96.3% 0.5% 3.2% 0.0% 0.0% -1.6% -0.4% 2010 2009 2008 2011 2010 2009 2008 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100% -94.8% -- 94.4% -94.5% -95.6% -953% -972% -1013% -0.5% -1.1% -0.7% 0.3% 16% -34% 40% 4.7% 44% 48% 46% 54% 06% 53% 0.2% 0.1% 0.0% 0.4% 0.7% 02% 0.1% 0.0% 0.0% 0.1% 0.1% 0.1% 0.0% 0.5% -1.5% -1.5% -18% -28% -30' 38% -09% -0.4% 1.5% -0.2% 0.1% 0.1% 22% 24% 15% 2.1% 4,1% 13% 6.6% 7.3%