Skechers Essay Example | Topics and Well Written Essays - 1000 words

Skechers - Essay Example Online buying of products have been made possible with the establishment of the company's website. Starting in 2003, the company expanded its product portfolio to include branded apparel such as sportswear, underwear, sleepwear, socks and swimwear. Annual revenues in 2007 amounted to $1,394,181 which slightly increased to $1,440,743 in the fiscal year of 2008. The expectation for 2009 is slightly lower and is seen to amount only to $1.3 Billion Dollars but is still seen as quite remarkable considering the global crisis and the cut-throat competition in the retail industry. a. Return on equity (ROE) ratio relates earnings to shareholder equity. It gives people a measure on whether the company is an asset creator a cash consumer. Simply put, ROE refers to the amount gained for a unit of amount invested. If the ratio is 0.5 then that means that for every dollar invested, 50 cents is additionally created. We can see from the table that the ROE is diminishing signifying a decrease in profitability which may be a result of the global slump. b. Current ratio provides a measure that indicates the ability of an entity to settle its near-term obligations. It is given by dividing Current Assets with Current Liabilities. A high result indicates a greater probability that the company can pay on time. From the values above, we can see that for the quarter ending June 2009, current assets were 3.55 times larger than current liabilities. c. Inventory turnover is the ratio of net sales over total assets which measure the ability of an entity to use its assets. A high figure indicates that there is efficient management of assets to produce a good sales number. We can see that that net sales is 3.79 times larger than total assets which is indeed remarkable. d. Accounts Receivables Turnover and Days of Collection - Accounts Receivable is the ratio between net sales and average accounts receivable. This ratio is a measure of how much sales are quickly turned into cash. Days of Collection is defined as 365/accounts receivables turnover and average number of days the company's receivables are outstanding which is defined between the credit sale and collection of cash. e. Debt Ratio - this ratio is defined as debt/total assets. This indicates how much of the capital of the company is provided by borrowing. 3. Analysis The principal goal of Skechers U.S.A in the design of its products is "to generate new and exciting footwear in all of our product lines with contemporary and progressive styles and comfort-enhancing performance features". The focus is on "new styles to be fashionable and marketable to the 12 to 24year-old consumer" while expanding operations to also include lines that "appeal to the broader range of 5 to 40year-old consumers, with an exclusive selection for infants and toddlers". Skechers, while producing shoes with some performance features, "generally do not position our shoes in the marketplace as technical performance shoes". Designers determine lifestyle trend information by "the review and analysis of modern music, television, cinema, clothing, alternative sports and other