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Autozone Case Study

In: Business and Management

Submitted By Ruegirl11
Words 2739
Pages 11
Table of Contents
Executive Summary 2

Profitability Ratios 3
Profit Margin 3
Return on Assets 3
Return on Equity 3

Asset Utilization Ratios 3
Receivables Turnover 3
Average Collection Period 3
Inventory Turnover 3
Capital Asset Turnover 3
Total Asset Turnover 3

Liquidity Ratios 4
Current Ratio 4
Quick Ratio 4

Debt Utilization Ratios 4
Debt to Total Assets 4
Times Interest Earned 4

Conclusion and Recommendations 5

Appendix I: Ratios Analysis Results 6

Executive Summary

The purpose of the report is to provide Wand Inc. a recommendation from the following choices: -
1. Grant short-term credit to Lululemon Athletica Inc.
2. Grant long-term credit to Lululemon Athletica Inc.
3. Consider purchasing shares in Lululemon Athletica Inc. or buying shares in Nike

On face value and looking at ratios in isolation, granting long term credit or investing in Lululemon looks like the best option for Wand Inc. However, further investigation on all the ratios and taking into account financial statement data, granting Lululemon short-term credit such as Notes Payables is the best viable risk tolerance option for Wand Inc. Lululemon’s liquidity ratios are growing year on year and are almost 3 times better than industry. The ratios positively favour short-term investors who prefer get their money back within a year.

The report details an analysis of significant ratios split into four primary categories.

Profitability Ratios which relate to efficiency and income earned on an investment base are of interest to creditors and investors. Lululemon’s profitability ratios have declined over three years. However, they are better than the industry average. Therefore granting Lululemon short-term loan is a much better viable option

Asset Utilization Ratios are used by investors and creditors to evaluate the managers’…...

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