Avon Product Inc. Harvard Case Solution & Analysis

Avon Product Inc Case Solution

The introduction of the Case:

Avon is the Beauty Product manufacturing, selling and distribution company all over the world, and had the largest name in the manner of listed publication in the Stoke market. This the financial research analysis report of the company’s segment and operation which taken from the financial statement of the enterprise. This report shows what the company should have to take steps for the overcome their problems.

Avon Company Financials Statement Analysis:

Avon Company is working as a cosmetic company which is stock listed company worldwide. In this industry, the leading company is the L’Oreal and P&G who are competitively given the competition the company.

Avon has inquired to make the company’s ratio analysis on the company’s current financial statement.

The Analysis of the financial statement has some benchmark criteria to follow. In this regard, the list of principles contains the extensively five criteria which are as follows:

  • The review historical income statements and balance sheets
  • The Compare past accounts over time to time basis
  • The Calculate changes that occur in individual categories from year to year
  • Determine the difference as a percentage
  • Identify the conclusion of the above evaluations.

Some mean the full information is providing in the section below which has the information of the review of the historical income statements and balance sheets.

Avon Income Statement shows that in is working with the entirely satisfactory level. The annual revenue of the company is $10,717 in the year of 2012, and now the last income is $5,718 which seems to be going to down from year by year. The falling of revenue will generate the low level of the operating income as seen on the figure is $219 million in the year of 2012 and the comparison of the $31 million in the year of 2016. The company performing is going down day by day.

The company is facing the problem to achieving the business’s goals sufficiently. Company’s Assets Seems to be going down from the total assets of $7,382 million in the year of 2012, but now the company is lying on the total assets of Value of $3,419 million in the year of 2016 which is a roundly equal to half if 2012.

The financials Statement of the company is more appropriately judge by the ratios of the enterprise. The ratios have four class which are as follow:

  • Liquidity Ratios:
  • Profitability Ratios
  • Activity Ratios
  • Leverage Ratios

Liquidity Ratios:

The liquidity ratio is allowed to consideration on the company current operations. The current event shave the components which are the total current assets, total current liabilities which will lead the four ratios that are as follows:

Firstly, the current rate shows that it was 1.45 of current assets to 1 current liabilities in the year of 2012. And now it is 1.34 current assets to 1 ratio of the current liabilities. This lead of the current property that shows that company is more over its current liabilities.

The Quick Ratios of the company is 1.03 in the year 2012, but now the company is going worst as 0.95 in the year of 2016. The Quick Ratios deals with the calculation of the current assets less the company inventories over its current liabilities. This medium shows that company is facing the problem of that they have more liabilities under the currents assets which have the value of the stock. The company's confronting with negative level of their quick ratio.

The inventory to net working capital ratio comprises the meaning of that list is over its currents assets less current liabilities. The company has the ratio of 0.93 of stock over its net working capital in the year of 2012 and 1.16 in the year of 2016. It shows that the inventory is over the company’s working operation. Which is not convenient position for the company

Cash ratio of the company is 0.45 in over its working capital ratio in the year of 2012 and now is showing that the business has the cash of 0.44 in the 2016 year..........

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