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)¡¯s 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)¡¯s 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 stockholders¡¯ equity of Coach Inc.
Exhibits 1
Coach Inc.
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