Gazal Corporation, Limited Free Essay Example

Gazal Corporation Limited is one of the largest publicly listed companies in Australia. The firm specializes in developing domestic and global brands in the apparel and fashion accessories industry. It is a leading supplier of surf and casual wear, men’s business shirts, intimate apparel and school wear under such brand names as Mambo, Maui & Sons, Nautica, Kenneth Cole, Trent Nathan, Van Heusen, Calvin Klein, Lovable, Oroton, Crystelle, Playboy, Morrissey, Kookai, Body Nancy, Ganz Bisley, Midford, Davenport, Bracks, and SMP.

The company is positioned as one of the leading apparel branded companies in Australia and this year it garnered a total revenue of $231 million. Its total assets stand at $159 million with total group employees of approximately 1000 people. FINANCIAL ANALYSIS • Profitability – The company is profitable as can be shown in the profitability analysis section of the report. However, in comparison with industry, sector, and S&P 500, it fell below their standards. The five year average net profit margin of the company is 4.

76 while industry, sector, and S&P 500 average return are 11. 69, 7.

92, and 12. 46 respectively. • Investments –The company’s average return on investments for five years is 9. 25%. This is a fair return, however, if we compare this with industry, sector, and S&P 500, their average return are 22. 15, 13. 30, and 10. 66 respectively which are all higher returns compared with the firm. • Financing – The firm’s debt to equity ratio of 0. 81 is not good if we compare this with industry which is 1. 05, sector with 0. 49 and S&P 500 with 0. 79. • Market and Per Share Growth – The five year average sales growth of the company is 6.

81% is low compared with industry’s 17.

48% average growth rate, sector’s 13. 48% average growth rate, and S&P 500 average growth rate at 13. 75%. The five year average EPS growth rate of the company is very low at 1. 23% Compared with the average growth rate of industry at 28. 14%, sector with 17. 35%, and S&P 500 with 23. 14%. THE FINANCIAL REPORT Brief Company Background Gazal Corporation is one of the largest publicly listed companies in Australia. It is based in Sydney and is listed on the Australian Stock Exchange. The firm focuses in developing domestic and global brands in the apparel and fashion accessories industry.

The company is a leading apparel supplier of surf and casual wear, men’s business shirts, intimate apparel and school wear sold under such brand names as Mambo, Maui & Sons, Nautica, Kenneth Cole, Trent Nathan, Van Heusen, Calvin Klein, Lovable, Oroton, Crystelle, Playboy, Morrissey, Kookai, Body Nancy, Ganz, Bisley, Midford, Davenport, Bracks, and SMP. Evolution The company is positioned as one of the leading apparel branded companies in Australia and this year it garnered a total revenue of $231 million. Its total assets stand at $159 million with total group employees of approximately 1000 people.

In the late 1990s and the early 2000s, the Gazal Group made key strategic moves by acquiring the Lovable trademarks in Australasia, the Nautica license for Australasia, the Mambo brand globally, the Trent Nathan brand and the Davenport Group which included the distribution rights for Calvin Klein underwear in Australasia. The firm was originally founded by the late Joe Gazal in Sydney in 1958 as a small company manufacturing men’s shirts and pyjamas. The business grew fast and generated an excellent reputation as a reliable supplier with growing capacity. ANALYSIS AND INTERPRETATION OF FINANCIAL REPORTS

PROFITABILITY ANALYSIS Gross Margin Ratio The company’s profitability analysis (see Table 1)is compared with the industry, sector, and Standard and Poor’s (S&P) index. The current gross margin ratio of the company is 48. 21 which is quite a good performance. However, if we compare this with the industry standard which is 54. 35, it is lower but in comparison to its sector which is 31. 41 and S&P 500 which is 44. 85, it is higher. In terms of the five year average gross margin ratio, the firm’s average is 48. 61 which is again lower compared to industry which is 52. 33 but again higher than sector which is 35.

50 and S&P 500 which is 43. 99. EBITD Margin Ratio The earnings before income tax deduction (EBITD) margin ratio for the current year is 9. 00 which is lower compared to industry which has a 22. 12 ratio. Also, in comparison with the sector index which has 11. 62 and the S&P 500 index which is 23. 16, it is also lower. In terms of the five-year average, the firm has a ratio of 10. 10 which is again much lower than industry standard which is 20. 05. Furthermore, it is again lower in the five year average ratio in comparison with sector with an index of 15. 28 and also with S&P 500 with an average index of 21.

38. Operating Margin Ratio Gazal Corporation’s operating margin ratio for the year 2007 is 5. 59 while in comparison with the industry standard which is 19. 57, it is much below it. Comparing it with the sector index which is11. 66 again it is below it and again comparing the firms’s ratio with S&P 500 index which is 19. 65, it is very much below the measure. The five year average for the firm’s operating margin ratio is only 6. 90 while the industry standard is 18. 16. As such, it is much below it, and the story is the same again if it is compared with the sector index which is 11.

60 and also with S&P 500 with a respective ratio of 19. 2 Pre-Tax Margin Ratio The firm’s current pre-tax margin ratio is 5. 59 and it is below with industry standard which has a much higher index of 18. 16. The firm’ ratio is also below the sector ratio which is 11. 42 and with S&P 500 which is 19. 65. The five year average pre-tax margin ratio of the company is 6. 90 and again it is below industry standard which has a much higher ratio of 17. 58. Furthermore, the company’s five year ratio for pre-tax margin is below the sector index which is 11. 59 and S&P 500 which is 18. 00. The company’s present net profit margin ratio is 4.

15 and in comparison with industry standard which is 11. 95, it does not pass it. In addition, the firm’s net profit margin ratio in relation with its sector with a ratio of 8. 40 and S&P 500 which has 13. 61 is also not encouraging to compare. The net margin profit ratio of the company for the five year average is 4. 76 but the industry standard ratio for the five year period is again a much higher figure which is 11. 69. The firm’s average ratio again failed in comparison with the average sector index which is a higher 7. 92 ratio and with S&P 500 with an average ratio of 12. 46.

INVESTMENT RATIO ANALYSIS Return on Assets The company’s current on assets (see Table 2) which is 6. 34 is much lower than the industry standard index which is 14. 52. It also fell below the sector figure which is 9. 87 and with S&P 500 with an index of 8. 39. The five year average for the return of assets for the firm is 6. 80 while the average industry standard for five years is 16. 57. The firm’s average return on assets fell below its sector which is 9. 98 and also with S&P 500 which has an average index of 7. 10. Return on Investment The Gazal Group’s current return on investment is 9.

27 is satisfactory. However, in comparison with industry standard which is 17. 99, it has to improve its efficiency in relation to its investments. Furthermore, its return on assets in slightly lower than the sector standard which is 12. 91 and also with S&P 500 which has 12. 39. The company’s five year average return on investment is again a satisfactory 9. 25. On the one hand, this average return of the company is below the industry standard which is 22. 15. Also, it is slightly lower than its sector average index which is 13. 30 and with S&P 500 with an average index of 10. 66.