Question

$ 209 210 PART 2 BUSIN BUSINESS ANALYSIS AND VALUATION TOOLS select ized and adjusted balance sheet Standardized (E millions) on-current haunties (non-interest be 5.055 shareholders' equity Minority interest Non-current debt Deferred tax liability Other non-current liah Total non-current liabilities Current debt Trade payables Other current liabilities Total current liabilities 444 2522 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 2,073 & 1975 112 2,391 10,127 2,453 9418 Calculate Inditex's net operating profit after taxes, operating working capital, net.com and net assets in 2007 and 2008. (Use the effective tax rate us expenselpot before well NOPAT.) 2 Decompose Inditex's retum on equity in 2007 and 2008 using the traditional approach 3 Decompose Inditex's retum on equity in 2007 and 2008 using the alternative approach. What plains the ference between Inditex's return on assets and its operating return on assets? 4) Analyze the underlying drivers of the change in Inditex's retur on equity. What explains the decrease in retum on equity? How strongly does Inditex appear to be affected by the economic crisis of 2008? (In you answer, make sure to address issues of store productivity, cost control, pricing and leverage.) Problem 2 Ratio analysis and acquisitions of mortable GPS car navigation systems that it sells ac 6197 milli

Answer 1

1)                  
           2018   2017  
   Operating Profit   EBIT   2133   2033  
                  
   Profit Before Taxes   EBT   2050   1953  
       Taxes   455   474  
       Tax Rate   22%   24%  
                  
   Net Operating Profit After Tax   NOPAT   =   EBIT(1-Tax)   Formula
                  
   Net Operating Profit After Tax   NOPAT   1659.58   1539.58  
                  
   Net Oprating Working Capital   NOWC = (Current Assets - Cash and Securities) - (Current Liabilities - Non-interest liabilities).          
                  
       Total Current Assets   3264   2982  
       Cash & Securities   1466   1466  
                  
       Total Current Liabilities   2391   2458  
       Trade Payable   2073   1975  
                  
   Net Oprating Working Capital   NOWC   1480   1033  
                  
                  
       Net Non Current Assets   5397   4971  
       Net Debt   771   1000  
       Net Assets   8661   7952  
                  
                  
2)   Return on equity   ROE   2018   2017  
                  
       Shareholders Equity   5055   4414  
       Net Income   1587   1471  
                  
       ROE   31%   33%