Financial Statement Analysis of Puma

Ahmad Salam

Abu Dhabi University, Email: 1064042@adu.ac.ae

Supervised by:

Professor Haitham Nobanee

Abstract:

In this research paper, I collected the financial data from puma annual reports and
analyzed the main ratios of liquidity, efficiency, leverage, and profitability.

Introduction:

Founded in Herzogenaurach, Germany in 1948, PUMA is one of the world’s largest

carriers of sport-lifestyle footwear, apparel, and accessories. The PUMA Group owns the
brand's PUMA, Cobra Golf and Tretorn. The organization distributes its products in extra
than 120 nations and employs more than 9,000 humans worldwide. It is committed to
operating in approaches that make a contribution to the arena with the aid of supporting
Creativity, Sustainability and Peace, and using staying actual to the principles of being
Fair, Honest, Positive and Creative in choices made and moves taken (about.puma.com,
2020). Over the years, PUMA has stayed authentic to its 4 cornerstones: heritage, game,
technological innovation, and design. The brand is that specializes in bringing distinctive
designs and an international outlook to every product variety utilizing the blending
effects of the game, lifestyle, and style. This fusion is understood as “Sportlifestyle”.
PUMA perspectives game as a philosophy on life – one which emphasizes fitness, well-
being, and living an active life. Since Sport can be different things to different people,
PUMA processes it in a greater-lifestyle context, while not compromising overall
performance. This is exactly what the emblem method when it speaks of “Sportlifestyle”.
In 1993, at the age of thirty, Jochen Zeitz was appointed chairman & CEO. Zeitz has
Spearheaded and held the number one obligation for the global restructuring of PUMA,
which became in economic difficulties at the time (about.puma.com, 2020). The term
“ratio analysis” refers to the analysis of the economic statements in conjunction with the
interpretations of financial outcomes of a specific period of operations, derived with the
help of ‘ratio’. Ratio evaluation is used to decide the monetary soundness of a
commercial enterprise's concern. I will introduce ratio evaluation, what it's far used for,
what are the blessings and dangers of it, and its limitations. Ratio evaluation is a
conceptual method which dates returned to the inception of accounting, as a concept.
Financial evaluation as a scientific device is used to perform the calculations in the area
of accounting. To appraise the legitimate and existent well worth of an enterprise, the
economic device comes handy, regularly. Besides, it also allows the corporations to study
the overall performance spanning across a long time frame along with the impediments
and shortcomings. Financial analysis is vital to the mechanism for a clear interpretation
of financial statements (fashiongear.fibre2fashion.com, 2020). It aids the process of
discovering, the lifestyles of any cross-sectional and time collection linkages between
numerous ratios. Formerly, Security certified as a major requisite for banks and financial
institutions, to consider and provide loans and advances. However, there’s been a whole
paradigm shift within the structure. Currently, lending is based on the evaluation of the
actual need of the firms. The financial viability of a proposal, as a base to supply loans, is
now been given precedence over security (Alkuwaiti and Nobanee, 2020). Further, an
detail of threat is imperative in every enterprise choice. Credits, run a higher risk, as a
part of any choice making in enterprise and so, Ratio analysis and different quantitative
strategies mitigate the hazard to a few the quantity via supplying a fair and rational
evaluation of risks. Ratio evaluation extensively explains the system of computing, acts
as an important tool in willpower and presentation of the connection of related items and
agencies of items of the economic statements. The monetary role of a unit is concretely
and surely encapsulated by the manner of ratio analysis. The significance of Ratio
Analysis for a holistic Financial Analysis stays unflinchingly supreme (AL-Shamsi, and
Nobanee, 2020). The ratio can be used within the form of a percentage, Quotient, and
Rates. In different words, it can be expressed as a to b; a: b (a is to b) or as a simple
fraction, integer, and decimal. A ratio is calculated by dividing one item or discern by
using some other item or determine ( www.edupristine.com, 2020).

Methodology:
Table 1: Financial Data (Puma)

Item/Year 2019 2018 2017 2016

Current Assets 2481.2 2192.8 1884.8 1765.4
Current 1558.9 1195.2 1056.5 894.9
 Liabilities
Inventories 1110.2 915.1 778.5 718.9
Cash 518.1 463.7 415.0 326.7
Receivables 611.7 553.7 503.7 499.2
Total Assets 4378.2 3207.2 2853.8 2765.1
Total Liabilities 2457.9 1485.0 1197.1 1042.9
Total Equity 1920.3 1722.2 1656.7 1722.2
Sales 5502.2 4648.3 4135.9 3626.7
Cost of Goods 2815.8 2399.0 2181.5 1970.3
Sold
EBIT 440.2 337.4 244.6 127.6
Interest 48.4 34.1 32.2 26.0
Net Income 309.0 229.8 135.8 62.4
Note: number in millions.

Table 2: Liquidity Ratios of (Puma)

Ratio/Year 2019 2018 2017 2016

Current Ratio 1.59 1.83 1.78 1.97
Quick Ratio 0.879 1.069 1.047 1.169
Cash Ratio 0.332 0.387 0.39 0.365

current ratio
2.5

1.5

0.5

0
2019 2018 2017 2016
 quick ratio
1.4

1.2

0.8

0.6

0.4

0.2

0
2019 2018 2017 2016

Cash Ratio
0.4
0.39
0.38
0.37
0.36
0.35
0.34
0.33
0.32
0.31
0.3
2019 2018 2017 2016

The liquidity ratio gives information about how the company will achieve its short-term
liabilities with the help of short-term assets. It shows if the company has enough money
to complete one operating cycle.
Table 3: Activity Ratios of (Puma)

Ratio/Year 2019 2018 2017 2016

Inventory Turnover 2.536 2.62 2.80 2.74
Receivable 8.99 8.39 8.21 7.265
Turnover
Total Asset 1.256 1.449 1.449 1.31
Turnover

Inventory Turnover
2.85
2.8
2.75
2.7
2.65
2.6
2.55
2.5
2.45
2.4
2019 2018 2017 2016

receivable turnover
10
9
8
7
6
5
4
3
2
1
0
2019 2018 2017 2016
 total asset turover
1.5

1.45

1.4

1.35

1.3

1.25

1.2

1.15
2019 2018 2017 2016

The activity ratio shows you how you can manage your revenue and how to manage
items in the balance sheet. It also shows the relationship between the assets and sales.

Table 4: Debt Ratios of (Puma)

Ratio/Year 2019 2018 2017 2016

Debt Ratio 0.56 0.463 0.419 0.377
Times Interest 9.095 9.89 7.596 4.907
Earned Ratio
 debt ratio
0.6

0.5

0.4

0.3

0.2

0.1

0
2019 2018 2017 2016

times interest earned ratio

12

10

0
2019 2018 2017 2016

The debt ratio is for the company to know the financial risk of the company. If the ratio is
less than 1 it is better and safe for the company because the risk will be less.

Table 5: Profitability Ratios of (Puma)

Ratio/Year 2019 2018 2017 2016

Return on 0.16 0.13 0.08 0.036
Equity
Return on 0.07 0.07 0.047 0.02
Assets
Profit Margin 0.056 0.049 0.03 0.017

return on equity
0.18
0.16
0.14
0.12
0.1
0.08
0.06
0.04
0.02
0
2019 2018 2017 2016

return on assets
0.08

0.07

0.06

0.05

0.04

0.03

0.02

0.01

0
2019 2018 2017 2016
 profit margin
0.06

0.05

0.04

0.03

0.02

0.01

0
2019 2018 2017 2016

The profitability ratio helps the company to see how much profit they are making
compared to the revenue. It also helps the company analyze how much assets they are
using to generate profit.

Conclusion:

To sum up, Puma is one of the world’s leading sports brands. Sports are our culture. This
makes us passionate about the design, development, sale, and marketing of footwear,
clothing, and accessories. In 70 years, PUMA has built a reputation as the maker of quick
product designs for the world's fastest athletes: improving areas such as football, running
and fitness, performance-inspired golf and motorsports, and lifestyle products. PUMA
has an amazing history full of inventions, prototypes, and products to look back on. To
this day our presence can be felt in the sports and lifestyle industries. And so we can hold
it. If you ask us, creativity is the foundation of product design (Strothoff International
School, 2020). Of course, we are constantly sharpening our design principles: We have
introduced products such as the CREEPER and the FIERCE. Puma is increasing their
profit every year and they are becoming more famous (Coventry University, 2020) . The
efficiency of its distribution PUMA has continuously improved. At the same time, we
have grown our presence around the globe in main sports success and sports style
accounts (Al Dhaheri and Nobanee, 2020). By being a reliable partner for them, and
maximizing PUMA 's contribution to their business, we remain committed to
strengthening our relationships with key retailers. PUMA is continuing to make progress
in key areas including further changes to the International Trade Organization of PUMA.
This centrally handles global order and invoice flow, the roll-out of a new product
production system, further standardization of ERP systems, and upgrades to the IT
network as a whole.

References

https://about.puma.com/en/investor-relations/financial-reports, 2020

https://about.puma.com/en/this-is-puma/our-mission, 2020

www.edupristine.com, 2020

fashiongear.fibre2fashion.com, 2020

Coventry University, 2020

Alkuwaiti, Maitha and Nobanee, Haitham, Social and Sustainability Capital: A Mini-
Review (2020). Available at SSRN: https://ssrn.com/abstract=3538828 or
http://dx.doi.org/10.2139/ssrn.3538828

Al Dhaheri, Ali and Nobanee, Haitham, Sustainable Microfinance: A Mini-Review

(2020). Available at SSRN: https://ssrn.com/abstract=3538442 or
http://dx.doi.org/10.2139/ssrn.3538442

AL-Shamsi, Fatima and Nobanee, Haitham, Sustainable Taxes: A Mini-Review (2020).

Available at SSRN: https://ssrn.com/abstract=3538679 or
http://dx.doi.org/10.2139/ssrn.3538679