Michael Hill International Limited



Executive Smarmy

The report covers the broad topics of financial management, which are SWOT analysis, ratio analysis, valuation of stock, and sensitivity analysis. The company chosen for this report is Michael Hill International Limited. The report targets at enhancing the comprehension and understanding of the key drivers of firm's value. The company mainly operates in retailing business of jewelry. The company owns and run 252 stores in Australia, Canada, New Zealand, and USA.

Strengths of company include enhanced customer base, differentiated products, and strong brand image. Weaknesses of the company include vulnerability to foreign exchange risk, and slower growth in sales. Opportunities for the company include good business exposure in Asian regions, growth in jewelry market worldwide and threats to the company include intense competition and inflated cost of raw materials.

Financial analysis is a useful tool that helps in measuring and evaluating the financial health of the organization. The liquidity ratio of the company exhibits a declining trend as a result of higher increase in current liabilities as compared to current assets. The quick ratio of the company has increased relatively throughout the analyzed time period. The reason behind increased quick ratio and decreased current ratio is the excessive storage of inventory by company. The debt to equity ratio of the company represents a slight decrease in the consumption of debt to finance the company's assets in the year 2012. The interest expense of the company also reduced as a result of reduced bank borrowings throughout the year from $ 5653 to $ 3856.

The receivable turnover of the company shows a declining trend. It indicates that company has adapted a strict and rigorous policy of collecting receivables. The inventory turnover ratio for the company has a declining trend indicating that company converts its inventory into sales 1.08 times in a year during 2012. The asset turnover of the company exhibits a slight decreasing trend. The overall revenues of the group increased by 5% in 2012 and 10% in 2011.The overall assets of the company have increased as already mentioned throughout analysis. The net profit increased by 5.1%. The company generates 20% of profit out of its equity. The overall increase in operating cash flow is a result of improvised and boosted sales figures achieved from all markets. The company has been lifting the gross profit margin and gross return on inventory employed as one of its priority concern in the past year.

The intrinsic value of company is calculated to be 0.18, where as market price is recorded as 0.91. The company has a sound financial position and strong potential for growth in future.

Michael Hill International Limited

Introduction

The primary aim of this report is to conduct a systematic and detailed financial analysis of the company named as Michael Hill International Limited. The report is divided into six vast segments, which are SWOT analysis, financial analysis, weighted average cost of capital, intrinsic and extrinsic vale of stock, market analysis of stock, and sensitivity analysis. Based on the aforementioned financial analysis of the ...