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William Duray BA2340 Company Report on VF Corporation

The company that is in focus in this paper is The North Face, an outdoor and mountaineering company. Because this company is owned by a larger corporation, the financial reports will be coming from its parent company, VF Corporation. In this report, I will discuss many aspects regarding the companys financial state of being according to the 2008 financial statements. These items will include the following aspects of the statement, inventories, cash & cash equivalents, accounts receivable, fixed assets, liabilities and stockholders equity. Following the analytics of the numbers the last section will be a general summary of how VF Corporation is sitting in todays market. Inventories When it comes to inventories for the corporation, they have showed gains when looking at the difference between the two thousand and eight and seven fiscal years. The end of the year numbers for 2008 and 2007 are $1,151,895 and $1,131,752, respectively. The method of costing that VF Corporation uses for its inventories as I saw it was FIFO. The inventory turnover rate for the company was calculated using costs of goods sold/ending inventory 2008. That number came out to be 3.7188, this signifies that the company sells its entire inventory about three and three quarter times during the fiscal year. The company has 43.41% of their assets invested into inventories. Inventories in 2008 made up $1,151,895 out of the $2,653,010 that was reported as total current assets for the company. The only thing I thought was interesting about the inventory notes in the financial statements was the fact that they have most of their money as assets tied up in inventory. It would make sense because their operations are largely merchandise based, but inventory made up 43% while the next highest category in assets was accounts receivable with 32% of the assets. Cash & Cash Equivalents For this section, the company reported $381,844 in 2008 and $321,863 in 2007 for cash and cash equivalents. This section showed slightly more growth than the inventory section between the two years. The quick ratio for the company was shown to be 1.3878; this means that the company is fairly liquid with its quick cash compared to current liabilities. When turning toward the statement of cash flows, the company earned less by means of the cash provided by operating activities of continuing operations. This value dropped from $833,629 in 2007 to $679,472 in 2008. Similar trends can be seen throughout the statement. In the investing section of the cash flows statement you can see that the company spent less investing in 2008 compared to 2007, but used that money instead in the financing section of the report. One major thing that affected the financing section was the fact that in 2008 there were no proceeds from long term debt, making the value at the end of the financing section

much larger than its counterpart for 2007. The final value for the 2008 financing section was $(389,844) compared to the $(50,652) shown in 2007. Accounts Receivable In the accounts receivable section, there was a slight decline between 2007 and 2008. The accounts were $970,951 and $851,282 respectively. This shows a loss of $119,669 between the two years. In the statement of cash flows shows that in 2008 there was a gain of $52,679 while there was a loss of $(49,673) in the report for 2007. The company in fact does have an allowance for bad debts, but it is under the Provision for doubtful accounts section in the statement of cash flows. It did not say specifically how the company determines the rate that they use, but if you go from the provision they provide and the accounts receivable section of the balance sheet, they make provisions for doubtful accounts around 2.5% of their stated accounts receivable. Looking at each section of the corporations annual report, they dont factor their receivables. The receivable turnover ratio between 2007 and 2008 increased from 7.354 to 8.882 times a year that they collect their receivables. Also with that the average days in accounts receivable was 41.09 days in 2008 and 49.63 days in 2007. These ratios show that the company was being slightly more rigorous about collecting their receivables in 2008, and thus lowered the days in accounts receivable by almost ten days. After reviewing all the information regarding the accounts receivable sections of the report I believe that the company is doing a fairly efficient job of collecting their receivables as well as keeping their allowance for doubtful accounts fairly low because of this efficiency. Fixed Assets In the asset portion of the annual report, they state a value of $1,557,634 and $1,529,015 for 2008-2007 under the section for Property, Plant and Equipment. As seen above, there was an increase between the two years. In this section the only other assets that are mentioned are the intangible assets, goodwill and other The value for intangibles decreased a little bit from 2007 to 2008 as well as the stated values for goodwill, the other assets were the only ones that rose out of the three accounts in question. In the reports, the company does not mention any capital leases that they have out at the time of issue for the report, which was December 2008. The return on assets ratio for the two years is 9.17% for 2007 and 9.35% for 2008. This is a good increase, it shows that the company is making better use of their assets and becoming more efficient as the years progress. Liabilities The current liabilities section for the company report shows that between the two years there has been a decrease in the account values from $1,134,387 at the end of 2007 down to $1,012,182 in 2008, a total decrease of $122,205 for current liabilities. In the

long term section of the liability section of the report, this slight decrease follows through. The long-term debt for 2007 was $1,444,810 and went down by a value of $303,264 to $1,144,810 in 2008. Following the concept of measuring assets to liabilities leads to the current ratio for the past two working periods. The current ratio showed an increase from 2.3 in 2007 to 2.6 in 2008. This current ratio is pretty good, it shows that the company is gaining momentum and if they look to get some sort of loan they can still meet their short-run obligations while still paying their long term debts. This ratio basically says that they are being fairly efficient with the way they are financing themselves and using their assets. When looking around the liabilities part of the annual report, there was nothing to be found regarding bonds or bonds payable. Right now, according to Moodys the V.F. Corporation is rated at A3. This means that the company is rated A in its obligations and is considered upper-medium grade and if youre an investor you are subject to low credit risk when thinking about putting your money into this corporation. After looking on both Moodys and in the Annual report, I could not find what assets were financed with debt, the statements only show that there is long term and short term debt and do not specify what these debts cover. Stockholders Equity The VF Corporation has reported that in 2007 there were 110M shares outstanding and 109M in 2008, the company did not disclose in its summary of operations what amount were authorized or issued though, it did point out that there was no redeemable preferred stock for the past three years. If you look toward sites such as Yahoo Finance, they will state that the company has an average volume of 724,252 for the past three months measured. The earnings per share (basic) for the company for the past years was $5.52 in 2008 and $5.36 in 2007, while the diluted earnings per share was $5.42 in 2008 and $5.22 in 2007. This shows a slow rise in how much the company is making per share that is owned. Which also goes along with the previous trend that the company is becoming more efficient in its operations. The corporation itself is based and was founded in Greensboro, North Carolina. Its stock is traded on the New York Stock Exchange, and is currently valued at $80.39 as of March 17, 2010. The company currently pays a $0.59 per share each quarter dividend. The company has paid a dividend for the past two years. The company as far as I could tell from the quarterly reports and the annual report only currently pays a cash dividend only, but you can opt to reinvest your dividend toward more share ownership through a program with the company. According to Yahoo Finance, the company has not split its stock since November 25, 1997. The company has not reported any restrictions on its retained earnings part of the financial statements. Conclusion

The multiple brand owning corporation, VF Corporation, is doing fairly well and is gaining momentum in todays economy. It has shown steady growth across multiple areas of its financial statements. The company is positioned very well in todays economy because they are a fairly safe corporation, they have many brands that each are in a niche and all are performing well and even increasing their revenues in these times. If I had the money, I believe that I would indeed buy stock in VF Corporation, they have gained significant ground and I think they would be a good long term investment. This is because of their sheer size and good rating by Moodys. In all honesty, I think I would not want to work for the corporate sector of VF, but in the higher ranks in their brands such as Nautica or with The North Face clothing brands. This is because that way I would have a better chance in being involved in an area that I enjoy, like outdoor adventuring and activities. If I worked for the corporation as a whole I would have a far worse chance of being involved in a field that I would enjoy as much.