Coach Financial Analyze
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Financial analysis: Coach Inc.
Executive Summary
Coach Inc. was founded in 1941. It is a designer and marketer of high-quality, modern American classic accessories and also it is one of the best well known accessories brands in the USA. Coach Inc mainly focused on the market of U.S. and Japan. By opening, and expansion of stores, Coach achieved an outstanding result in fiscal year of 2004. I will explain its performance by DuPont Identity, and compare with Wilsons The Leather Experts Inc.
DuPont Identity analysis
In year of 2004, Coach Inc has ROE of 0.3345, which means every dollar in equity Coach Inc. generates 33.45 cents. Compare to Wilsons The Leather Experts Inc.(Exhibits 1)ЎЇs ROE -0.248, stockholder of coach will receive more benefit. We can analysis this result by three parts of DuPont Identity. The profit margin of 19.81% illustrates that Coach generated 20 cents in profit for every dollar in sales. It net income almost doubled from 2003, which is mainly due to additional week of sales. Compare to WLSN (Exhibits 1)ЎЇs negative net income, Coach makes a lot more profits. Coach Inc. has a total asset turnover of 1.28, which means each one dollar of assets will generate 1.28 dollar in sales. It is lower than WLSN. However, the assets turnover looks low, it caused by the fast expansion of retail stores. During this fiscal year, Coach opened 19 retail stores and two factory stores and also the expansion of stores in Japan. This action will benefit the future sales. Lastly, Coach Inc. has an equity multiplier of 1.3149, which means the company is relying more on debt to finance its assets. Coach Inc. has lower equity multiplier than WLSN(Exhibits 1). It because the huge stockholdersЎЇ equity of Coach Inc.
Exhibits 1
Coach Inc.
ROE = Profit Margin * Total Asset Turnover * Equity Multiplier = 0.3345
Profit Margin = Net Income / Net sales = 0.1981
Total Asset Turnover = Sales / Assets = 1.2843
Equity Multiplier = Assets / Total Equity = 1.3149
Competitor:
Wilsons The Leather Experts Inc (WLSN)
ROE = Profit Margin * Total Asset Turnover * Equity Multiplier = – 0.248
Profit Margin = Net Income / Net sales = – 0.05347
Total Asset Turnover = Sales / Assets = 2.3389
Equity Multiplier = Assets / Total Equity = 1.9828
Exhibits 2
Income statement
PERIOD ENDING
3-Jul-04
28-Jun-03
29-Jun-02
Total Revenue
1,321,106
953,226
719,403
Cost of Revenue
331,024
275,797
236,041
Gross Profit
990,082
677,429
483,362
Operating Expenses
Selling General and Administrative
545,617
433,667
346,354
Non Recurring
3,373
Operating Income or Loss
444,465
243,762
133,635
Income from Continuing Operations
Total Other Income/Expenses Net
4,000
1,754
825
Earnings Before Interest And Taxes
448,465
245,516
134,460
Interest Expense
808
695
1,124
Income Before Tax
447,657
244,821
133,336
Income Tax Expense
167,866
90,585
47,325
Minority Interest
(18,043)
(7,608)
(184)