remain a fixed percentage of sales, then its unlevered net income will also grow at rate g.
Similarly, the firm’s receivables, payables, and other elements of net working capital will grow at rate g.
The estimate of Ideko’s continuation value
can be combined with the forecasts for free
x
cash flow through 2010 to estimate Ideko’s
value today using the APV valuation model.
☺ The most critical financial component of working capital
☺ The franchisee should seek to minimize the risk of running out of cash
☺ The franchised business must ensure that bills due (accounts receivable) are collected in a timely manner
☺ The franchise owner may develop policies and practices
☺ Another way to significantly reduce working capital requ
1. With which of the international competitors listed in the case is it most interesting to compare Inditex’s financial results? Why? What do comparisons indicate about Inditex’s relative operating economics? Its relative capital efficiency?
GAP H&M Benetton Inditex
ROIC -0.15% 24.16% 11.20% 27.24%
Return on sales -0.06% 9.60% 7.05% 10.46%
COGS/sales 7
Capital Leases 2.7% 32.0% 3.0% 34.7%
Other Assets 13.8% 4.2% 14.8% 4.8%
Total Assets 100.0% 100.0% 100.0% 100.0%
Comments
- Korean Air has lower current assets which means they might have more difficulty in managing working capital or paying off debts in future.
- AMR Corp owns more airplane, whereas Korean Air leases more. So this should be considered as advantage for AMR Corp when compar
Capital(순운전자본)
= Current Assets(유동자산) – Current Liabilities(유동부채)
Represents operating liquidity available to a business, organization
Considered a part of operating capital
EBIT
Earnings before interest and taxes
EBIT = operating income + Non-operating income
Operating income = Revenue – Operating expenses
operating expenses = Cost of Go