Billabong Case

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A critical analysis is carried out in respect to the performance of Billabong through the application of ratio analytical tool and based on such analysis; there are different important areas of company’s performance that is assessed. The profitability performance of the company is not that effective and similar kinds of ineffectiveness being evident with respect the efficiency areas of the company. The liquidity performance has however showed improved level of performance of the company whereas the area of fearing performance is not that efficient, as the company’s utilisation of debt is increasing over year. Overall the performance of analysis indicated that the performance of Billabong is not that effective, as company sustained huge losses…show more content…
In respect to Billabong, the analysis of the profitability performance of the company is ensured by considering gross profit percentage and net profit percentage. The gross profit margin indicates a slight decline in profitability in 2014 as compared to 2013, as it declined from 51.1% in 2013 to 50.62% in 2014 whereas net profit margin has been negative as it was -77.92% in 2013 and improved in 2014 to -21.31%. The profitability performance showed the ineffectiveness of Billabong, as it has been negative. Although the gross profit percentage showed positive profitability of the company, but the net profit performance is significantly negative. This implies that there has been significant amount of indirect expenses evident in the company’s operational performance, and this proves to be an inefficient indicator of company’s profitability performance (Jones,…show more content…
The performance of analysis indicates that it is mainly the price earning ratio that has been utilised in evaluating the investment performance. Price earning ratio indicates the current share price in relation to per share earning. The earning per share indicates that earnings of the employees in respect to each particular share and this seemed to be highly efficient for Billabong in 2013 as compared to 2014. As for instance, it is analysed that the EPS remained at 104.8 in 2013 and it decreased to 24.9. This suggests that the role and importance of EPS performance seemed inefficient as the earning on per share declined for the investors (Brigham and Ehrhardt,

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