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Financial Analysis of Adidas Company - Case Study Example

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The paper "Financial Analysis of Adidas Company" highlights that generally speaking, the Equity ratio of ADIDAS is at 36.31% as of 2007 and the same has remained about the same level as in 2008.  The equity ratio has further improved to 42.49% as of 2009…
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Financial Analysis of Adidas Company
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Download file to see previous pages The Earnings per share of ADIDAS is €2.64 per share as of 2007 and the same has increased to €3.21 per share as of 2008.  The earnings per share have come down to €1.24 per share as of 2009. Although the ratio has come down it is still within the acceptable norms. The decrease in earnings per share is due to an increase in the number of shares due to the fresh infusion of capital.

The Dividend per share of ADIDAS is €0.50 as of 2008 and the same has slightly come down to €0.35 dollars per share as of 2009. Although the ratio has come down it is still within the acceptable norms.

The trading outlook from the point of view of short term investors would be to quit the company at this point as the company’s profitability has reduced and the dividend payout has also decreased. However, from the point of view of long term investors, the company still has good potential and there is a chance for recovery and hence he can wait for another quarter by putting some stop-loss criteria.

The ROE of ADIDAS is 18.23% for the year 2007 and the same has remained at the same level of 18.96% for the year 2008. The ROE has decreased drastically to 6.50% as of 2009 due to a substantial fall in the profitability of the company in the year 2009. This ratio is calculated considering the Closing equity. The ratio also indicates the efficiency with which the company has used its resources to generate profit. Thus the company’s financial performance has substantially decreased compared to the previous year. Equity Shareholders of the company are the main interest group who would like this ratio to be at a high level and improving year after year. This ratio is also considered by Prospective investors in making their decision to invest in the company.

The Gross profit Margin of ADIDAS is 47.40% for the year 2007 and the same has increased marginally to 48.67% for the year 2008. The Gross Profit Margin has slightly decreased to 45.39% for the year 2009. This ratio looks at how well a company controls the cost of its inventory and the cost of manufacturing its products. The higher the gross profit margin the better the profitability of the company. The Gross Profit Margin of ADIDAS is in the acceptable range. ...Download file to see next pagesRead More
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