Hermes financial analysis Essay Example | Topics and Well Written Essays - 1750 words

Hermes financial analysis - Essay Example Gucci and Louis Vuitton are seen to embrace modern fashion more than traditional garment and accessory designs. This creates a distinctive advantage for Hermes. The current paper focuses upon analysing the financial ratios. The ratios have been constructed on the basis of the information procured from the company’s financial statements. The analysis reveals whether the company is in a suitable financial position to expand and enhance their activities (Hermes annual report, 2013). The share price of Hermes has been depicting an upward rising trend. Share price can be considered to be an essential indicator of the financial health of a company, the same reason due to which share prices of Hermes has been included in the current study. The company has been seen to invest in profitable expansion and growth projects since the last five years. This has facilitated Hermes to maintain a significantly high share prices, as compared with other close competitors of the firm, especially during the crisis period. During the crisis period many retail firms were seen to face issues with asset management and maintaining adequate cash reserves, as support from external financial institutions was limited. However, the strong operating policies and the adequate financial stability of Hermes had facilitated the company to maintain continuity of operations without being dependent on external finance. The sales volume of Hermes had also not been affected majorly. All such factors facilitated maintaining adequate returns to shareholders and maintain rising share prices. In the following sections of the current paper, in depth analysis has been conducted in respect of the financial condition of the firm, considering the financial years 2012 and 2013. This is expected to give more insight regarding the reasons behind the company’s ability to maintain high share prices. Gross profit ratio measures the amount of profits earned by the company