Fundamental of Finance Assignment

SNHU 19E1
FINANCIAL ANALYSIS PAPER
PUMA and ADIDAS
PHẠM KHÁNH LINH – NGUYỄN PHƯƠNG ANH – NGUYỄN THỊ NGỌC LIÊN – TRẦN THỊ HỢP
3/5/2021
[This document is used for Fundamental of Finance Assignment]

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AN ANALYSIS OF PUMA AND ADIDAS
FINANCIAL RATIOS
Table of contents
A. Sportswear Industry
B. Financial Ratios
C. Stock Price
D. Conclusions
E. Appendix

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A. SPORTSWEAR INDUSTRY:
The European sportswear industry, one of the biggest blocs, comprises over 21,000 companies that
employ 278,000 employees, generating €27.5 billion in turnover annually. European Confederation of the
Footwear Industry (CEC) chairman Luis Onofre asserts, “The fact that nine European countries rank
among the top 15 world exporters is a clear indicator of the success of European footwear products at the
global level.”
The dynamics and buying preferences to a certain extent are singular and peculiar to each market block.
In Europe, the “quality” factor is almost a leitmotif, and personalized and differentiated footwear has been
in high-demand for quite some time now.
German footwear market is also inherited characteristics of its bloc.
The two major sportswear and sports footwear industries in Germany are Adidas and Puma. These two
were owned by brothers Adolf Dassler and Rudolf Dassler where after the relationship between the
brothers deteriorated they decided to part ways in business, Adolf went on to open Adidas while Rudolf
established Puma. These two companies compete with each other internationally and are the most vibrant
current trend setters in the industry in Germany.
Globalization, as in any other industry the world over, has definitely impacted the sports footwear
industry in Germany. Leading companies in the production of sports footwear have been forced to
relocate internationally to take advantage of key opportunities internationally.
Globalization helps a firm to spread political and economic risk whereby, joint ventures have become
widespread as a way of meeting the need to tap the international market, technological knowledge, design
and skills.
Some of the major competitors of Adidas and Puma such as Nike relocated to countries in Asia such as
Thailand and China exclusively because of low labor cost in these countries comparative to those of
firm’s country of origin.
This has translated to low operating costs for these firms hence they are able to lower the price of their
products comparative to that of its competitors which in turn has given such firms an extra edge over their
competitors in terms of pricing. This means that such companies will chip away at some of Germanys’
leading producers of sportswear market share.

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Entry barriers into the sportswear market are relatively few. This scenario has led many investors trying
their luck in the lucrative sports footwear industry.
Consequently, the market has become fragmented due to a lot of competitors entering the industry and as
result, the market share of leading producers of sports foot wears are gradually loosing their market to
their ever increasing competitors. In turn this has prompted leaders in the industry of sports foot wear to
shift their focus to acquisition of additional brands merging with other firms in an effort of consolidating
their position as leaders of this lucrative industry.
By taking a deep dive into PUMA and ADIDAS operating results, we expect to be informed about sport
wear market and its characteristics. We also expect to comprehend how these corporations manage their
assets, liabilities, capital, and how investments and financial activities are performed by working on their
financial reports.
As the two corporations have a close relation with each other, we decided to study them as a main subject
(PUMA) and a standpoint (ADIDAS) for comparison.
This report presents a financial analysis of the sportswear company PUMA by
comparing different financial ratios over time and with its competitor. It further
reviews PUMA’s position in the financial markets and evaluates returns in relation to
the level of risk associated from an investor perspective.

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B. FINANCIAL RATIOS ANALYSIS:
1. Liquidity ratios:
1.1 Current ratio:
Current ratio= Current Assets
Current Liablities
2020 2019
PUMA ADIDAS PUMA ADIDAS
Current asset 2,613.00 12,154.00 2,481.20 10,934.00
Current
liability
1,872.80 8,827.00 1,558.90 8,754.00
Current ratio. 1.40 1.38 1.59 1.25
- In 2020
 For each Euro of current liability, PUMA company has 1.4 Euros of its current assets to
convert into cash to pay current liabilities.
 For each Euro of current liability, ADIDAS company has 1.38 Euros its current assets to
convert into cash to pay current liabilities.
- In 2019
 For each Euro of current liability, PUMA company has 1.59 Euro its current assets
to convert into cash to pay current liabilities.
 For each euro of current liability debt, ADIDAS company has 1.25 Euro its current
assets to convert into cash to pay current liabilities.
- PUMA: A quick analysis of the current ratio tells you that the 2020 company's liquidity
had slightly decreased compare with 2019, from 1,59x to 1,39x.
- ADIDAS: A quick analysis of the current ratio tells you that the company's liquidity had
improved between 2020 and 2019 since it rose from 1.249X to 1.377X.
*€ in million

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- Comparision : Puma’s current ratio (1,395x) is greater than Adidas’s current ratio
(1.377x) proves that Puma’s liquidity is better (2020) . This shows that Puma has
managed their liabilities and short-term assets more effectively (PUMA's current ratio
relative to ADIDAS's is almost equivalent in 2020.)
- With this competitive difference between their Current Ratios, investors will face a give-
and-take situation while creditors like to see high current ratio, shareholders commonly
okay with lower Current Ratio because that means probably not a surplus of unused
inventories and inefficiency in productivities. Therefore investors must carefully consider
where to fall in this particular ratio.
POSITION: Moderate
1.2 Quick/Acid Test Ratio:
Quick ratio=Current assets−Inventories
Current liablities
2020 2019
PUMA ADIDAS PUMA ADIDAS
Current Asset-
Inventories
( 2,613.00-
1,138.00)
12,154.00-
4,397.00)
(2,481.20 –
1,110.20 )
(10,934.00 –
4,085.00)
Current
liabilities
1,872.80 8,827.00 1,558.90 8,754.00
Quick ratio 0.79 0.88 0.88 0.78
- In 2020
 For each Euro of current liability , PUMA company has 0.79 Euro its current assets to
convert into cash to pay current liabilities.
 For each Euro of current liability , ADIDAS company has 0.88 Euro its current assets to
convert into cash to pay current liabilities.
- In 2019
 For each Euro of current liability, PUMA company has 0.88 Euro of its current assets to
quickly convert into cash to pay current liabilities.
*€ in million

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 For each Euro of current liability, ADIDAS company has 0.78 Euro of its current assets to
quickly convert into cash to pay current liabilities.
- PUMA: A quick analysis of the current ratio will tell you that the company's quick
liquidity has gotten just a little bit worse between 2020 and 2019.
- ADIDAS: A quick analysis of the current ratio will tell you that the company's quick
liquidity has gotten just a little bit better between 2020 and 2019 since it rose from 0,78X
to 0,88X.
- Comparison: Puma’s quick ratio (0.79X) is lower than Adidas’s quick ratio (0.88X)
proves that Puma’s ability of paying off short-term debt is worse (2020).
- Both corporations have Quick ratio smaller than 1 which suggests they have trouble with
paying current liabilities. This could be unfavorable if the company couldn’t manage to
satisfy the debts, yet could be understandable if the company feel safe and choose to
invest their money in profitable projects.
- Fell below 1, their quick ratios could be a warning sign of troubles, therefore they should
adjust this ratio as soon as possible.
POSITION: weak
o Both PUMA and ADIDAS with a quick ratio less than 1 is unlikely to be
able to repay current liabilities and must be carefully considered
2. Asset Management Ratios:
2.1 Inventory Turnover:
Inventory Turnover Ratio= Sales
Inventories
2020 2019
PUMA ADIDAS PUMA ADIDAS
Sales 5,234.40 19,844.00 5,502.20 23,640.00
Inventories 1,138.00 4,379.00 1,110.20 4,085.00
Inventory
Turnover
4.60x 4.51x 4.96x 5.79x
*€ in million

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PUMA’s 2020 Inventories turnover is relatively equal with its 2019, and is slightly higher than ADIDAS
for both 2020 and 2019. This ratio indicates that they had comparatively maintained the level of sales and
their inventories. But still, the low turnover suggests PUMA and ADIDAS have too much low value
inventories. They should improve this ratio by releasing new design, enhancing marketing activities if the
expense budget allow, or adjust their managing strategy to boost this ratio.
POSITION: Moderate
2.2 Days sales Outstanding (DSO):
DSO= Receivables
Sales/365
2020 2019
PUMA ADIDAS PUMA ADIDAS
Receivables 621.00 2,568.94 611.70 3,270.12
Sales 5,234.40 19,844.00 5,502.20 23,640.00
DSO 43.30 47.25 40.58 50.49
- In 2020
 PUMA’s receivables were collected after 43.3 days the selling activities were made
 ADIDAS’s receivables were collected after 47.25 days the selling activities were
made
- In 2019
 PUMA’s receivables were collected after 40.58 days the selling activities were made
 ADIDAS’s receivables were collected after 50.49 days the selling activities were
made
PUMA have their own classifying system applied for specific customer therefore they don’t have a
general credit term. The 2020 DSO ratio of PUMA increased from 40.58 to 43.30 days which is
insignificant. But compare with ADIDAS, we can say that PUMA didn’t let their receivables be paid as
late as ADIDAS. It could be good that their customer credit have little chance to turn into bad debt and
*€ in million

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become uncollectible. And because of the small distance of this ratio between PUMA and ADIDAS, we
can see that their credit policies quite keep pace with each other.
POSITION: Moderate
2.3 Fixed Assets Turnover:
¿ AssetsTurnover Ratio= Sales
¿ Assets
2020 2019
PUMA ADIDAS PUMA ADIDAS
Sales 5,234.40 19,844.00 5,502.20 23,640.00
Fixed Assets 2,071.00 8,899.00 2,481.20 9,746.00
Fixed Assets Turnover 2.35x 2.23x 2.90x 2.43x
- In 2020
 Each Euro PUMA had invested in fixed assets generates 2.35 Euro Revenue
 Each Euro ADIDAS had invested in fixed assets generates 2.23 Euro Revenue
- In 2019
 Each Euro PUMA had invested in fixed assets generates 2.90 Euro Revenue
 Each Euro ADIDAS had invested in fixed assets generates 2.43 Euro Revenue
PUMA’s Fixed assets turnover ratio is slightly above ADIDAS for both 2020 and 2019. And because
these two corporations did not record any depreciation in their financial report, it can be interpret that
they both manage to use their fixed asset comparatively effective. With every Euro spend on Fixed
Assets, they collect 2~3 Euro of revenue.
POSITION: Moderate
2.4 Total Assets Turnover:
Total Assets Turnover Ratio= Sales
Total Assets
*€ in million

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2020 2019
PUMA ADIDAS PUMA ADIDAS
Sales 5,234.40 19,844.00 5,502.20 23,640.00
Total Assets 4,684.10 21,053.00 4,478.20 20,680.00
Total Assets
Ratio
1.12x 0.94x 1.26x 1.14x
- In 2020
 Each Euro PUMA had invested in total assets generates 1.12 Euro Revenue
 Each Euro ADIDAS had invested in total assets generates 0.94 Euro Revenue
- In 2019
 Each Euro PUMA had invested in total assets generates 1.26 Euro Revenue
 Each Euro ADIDAS had invested in total assets generates 1.14 Euro Revenue
But the case is slightly different when it comes to Total assets turnover ratio. PUMA has a TATO ratio
somehow higher than ADIDAS. With the portions of fixed assets between two corporation are nearly
equal, the different here caused by the amount of inventories remained. Even though ADIDAS
receivables reduced for €701.18 million, the increase of inventories and securities hold making the ratio
fell down. For the record, the earning power of both company are quite the competitive. With every Euro
spending on total assets, they get back about 1 Euro of revenue.
POSITION: Moderate
3.Debt Management Ratios:
3.1 Total Debt to Capital:
Total debt
Total capital = Total debt
Total debt+ Equity(Total captital)
*€ in million

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2020 2019
Puma Adidas Puma Adidas
Total debt 931,7 5.890,00 755,50 4.770,00
Total captital 1.722,40 8.936,00 1.873,60 8.391,00
Debt-to-capital
(%)
54% 66% 40% 57%
- In 2020
 PUMA’s debt ratio is 54%, which means that its creditors
have supplied roughly half of its total funds.
 The financing at ADIDAS is heavily relies on debt with 66%
- Debt ratio of PUMA in 2020 (54%) is larger than its in 2019( 40%), proving that the
company has relied more on debt than 2019.
- Compared to ADIDAS, PUMA has a lower debt ratio (54% < 66%) impart PUMA's debt
protection for creditors is higher, therefore the company has a more secure capital
structure.
POSITION: Moderate
3.2 Time - interest – earned ratio ( TIE)
TIE= EBIT
Interest charges
2020 ( million) 2019 ( million)
PUMA ADIDAS PUMA ADIDAS
EBIT 240.20 739.00 465.40 2,718.00
Interest
charges
77.90 164.00 47.80 160.00
*€ in million
*€ in million

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TIE 3.08 4.51 8 16.99
- In 2020
 For each Euro interest payable, PUMA company has 3.08 Euro of EBIT to
pay interest expenses.
 For each Euro interest payable, ADIDAS company has 4.51 Euro of EBIT to
pay interest expenses.
- In 2019
 For each Euro interest payable, PUMA company has 8 Euro of EBIT to pay
interest expenses.
 For each Euro interest payable, ADIDAS company has 16.98 Euro of EBIT
to pay interest expenses.
- Both PUMA’s and ADIDAS’s TIE ratios are greater than 2 which will be considered
adequate to protect the creditors’ interest in the firm.
- PUMA's TIE ratio of 2020 is half lower than 2019 indicating the escalation of risk
compared to the previous year. However ADIDAS's index also decreased dramatically
which elucidates the influence of Covid on the retail industry is enormous. The decrease
of solvency could worry creditors since the de-escalation might evince they have a limit
in ability of paying interest. Therefore the firm may have to face some
difficulties if they plan to raise more funds for their operations.
- A moderate TIE can also indicate PUMA are taking advantage of the debt facilities. As
the firm takes benefit from their surplus, they should maintain this TIE level.
POSITION: Strong - Effective
4. Profitability Ratios:
4.1 Operating Margin:
OperatingMargin= EBIT
NetSales

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2020 2019
PUMA ADIDAS PUMA ADIDAS
EBIT 240.20 739.00 465.40 2,718.00
Sales 5,234.40 19,844.00 5,502.20 23,640.00
Operating Margin 5% 4% 8% 11%
- In 2020 Profit before interest and tax of PUMA accounted for 5% of sales. Profit before interest and tax of ADIDAS accounted for 4% of sales.
- In 2019 Profit before interest and tax of PUMA accounted for 8% of sales. Profit before interest and tax of ADIDAS accounted for 11% of sales.
- Even though the operating margin of two corporations are worse than 2019, PUMA had
made an improvement in reducing cost (proportionally) compare with a sink from 11% to
4% of ADIDAS in the same market condition. Because of the pandemic, it’s challenging
for manufacturers to maintain their performance from the previous period. Therefore the
effort in management (even proportionally) of PUMA under uncontrollable factors is
delightful at some certain degree.
POSITION: Moderate
4.2 Profit Margin:
ProfitMargin= NetIncome
NetSales
*€ in million
*€ in million

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2020 2019
PUMA ADIDAS PUMA ADIDAS
Net Income 78.90 673.64 262.40 1,917.00
Sales 5,234.40 19,884.00 5,502.20 23,640.00
Profit Margin 2% 3% 5% 8%
- In 2020 For 100 Euro of sales, PUMA made 2 Euro of net income. For 100 Euro of sales, ADIDAS made 3 Euro of net income
In 2019 For 100 Euro of sales, PUMA made 5 Euro of net income. For 100 Euro of sales, ADIDAS made 8 Euro of net income.
- Puma: A quick analysis of the Profit Margin has gotten a worse between 2020 (2%) and
2019 (5%) that this subpar result occurred for two reasons. Interest charges pull down its
net income and the low profit margin is impacted by PUMA’s heavy use of debt.
- Adidas: A quick analysis of the Profit Margin has also gotten a worse between 2020
(3%) and 2019 (8%).
- The net profit margin declined in 2020. Notice that in terms of Euro amount, net income
is lower in 2020. Nonetheless, it represents only 2% of sales; while in 2019, it represents
5%. For every euro of sales, PUMA made €0.02 in Year 2 and €0.05 in 2019. Hence in
terms of managing costs and expenses, PUMA did better in 2019.
- As having a lower ratio setting against ADIDAS’s, PUMA did uncompetitive
performances when it comes to generating profit. However the gap of it was tightened in
2020. In short, PUMA had managed to handle harsh conditions quite proficiently.
POSITION: Weak

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4.3 Return On Total Assets (ROA):
ROA= NetIncome
TotalAssets
2020 2019
PUMA ADIDAS PUMA ADIDAS
Net Income 78.90 673.64 262.40 1,917.00
Total Assets 4,684.10 21,053.00 4,378.20 20,680.00
ROA 2% 3% 6% 9%
- In 2020 For 100 Euro invested in total assets, PUMA could generate 2 Euro of net income. For 100 Euro invested in total assets, ADIDAS could generate 3 Euro of net income
In 2019 For 100 Euro invested in total assets, PUMA could generate 6 Euro of net income. For 100 Euro invested in total assets, ADIDAS could generate 9 Euro of net income.
- Puma: Puma’s ROA has gotten a worse between 2020 (2%) and 2019 (6%). This low
ROA can be resulted from the use of debt, higher in interest expense that causes a lower
net income.
- Adidas: Adidas’s ROA also has a worse between 2020 (3%) and 2019 (9%). This low
ROA resulted from the reduction of net income and the increase in total assets.
- Every dollar that PUMA's invested in assets generated 6 cents (2019) and 2 cents (2010)
of net income. PUMA’s was worse at converting its investment into profits, compared
with ADIDAS. It appears ADIDAS’s management made wiser choices in allocating their
*€ in million

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resources, in the reported periods, PUMA was less adept than its peers for both 2019 and
2020 in general.
- In 2019, both PUMA and ADIDAS showed optimistic ROAs with 6% and 9%
respectively which passed 5% to be considered as good ROAs.
- Due to the impact of the 2020 pandemic, PUMA’s and ADIDAS’s Net Income fall 70%
and 65% leading to the de-escalation of ROAs even though no significant fluctuation in
total assets occurred.
POSITION: Moderate – Weak
4.4 Return On Equity (ROE):
ROE= NetIncome
CommonEquity
2020 2019
PUMA ADIDAS PUMA ADIDAS
Net Income 78.90 673.64 262.40 1,917.00
Common Equity 1,722.40 6,454.00 1,873.60 6,796.00
ROE 5% 10% 14% 28%
- In 2020 For 100 Euro of equity invested, PUMA gets 5 Euro Net Income. For 100 Euro of equity invested, ADIDAS gets 10 Euro Net Income.
In 2019 For 100 Euro of equity invested, PUMA gets 14 Euro Net Income. For 100 euro of equity invested, ADIDAS gets 28 euro Net Income.
*€ in million

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- PUMA: PUMA’s ROE is reduced between 2020 (5%) and 2019 (14%). This decreased
ROE resulted from the decrease in net income. Therefore, to increase ROE, the company
has to improve net income.
- ADIDAS: ADIDAS’s ROE is also reduced between 2020 (10%) and 2019 (28%). This
decreased ROE resulted from the considerable decrease in net income. Therefore, to
increase ROE, the company has to improve net income.
- Another way to improve ROE is that to use greater of debt will lowers net income, but it
also lowers the firm’s equity. Therefore, the equity reduction can off-set the lower net
income. However, the company should not use this method to increase ROE.
- Generally, PUMA has an unfavorable ROE in both 2019 and 2020 because 15% of ROE
is a standard level for many investors when it comes to evaluate investment candidates.
- Comparison: As we can see the ROE of both companies has dropped but Puma's ROE
(5%) is still lower than that of ADIDAS (10%) in 2020. This shows ADIDAS that does a
better job of turning the capital invested in it into profit while PUMA doesn’t.
- ROE is a common determinant for investors therefore PUMA’s poor performance of this
ratio can affect investor’s decision.
POSITION: Weak
ROE is not an absolute indicator of investment value. After all, the ratio gets a big boost
whenever the value of shareholders' equity, the denominator, goes down. For a more
transparent view, we examine ROIC ratio which reveal the extent to which debt drives
returns.
4.5 Return On Invested capital (ROIC):
ROIC= EBIT (1−T )
TotalInvestedCapital
*€ in million

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2020 2019
PUMA ADIDAS PUMA ADIDAS
EBIT 240.20 739.00 465.40 2,718.00
Total Invested Capital 1722.40 9,622.00 1,883.80 8,343.00
Tax Rate 26% 27.37% 27% 25%
ROIC 10% 6% 18% 24%
- In 2020 For 100 Euro of total invested capital, PUMA gets 10 Euro after-tax operating income. For 100 Euro of total invested capital, ADIDAS gets 6 Euro after-tax operating income.
In 2019 For 100 Euro of total invested capital, PUMA gets 18 Euro after-tax operating income. For 100 Euro of total invested capital, ADIDAS gets 24 Euro after-tax operating income.
- PUMA: PUMA’s ROIC is reduced between 2020 (10%) and 2019 (18%).
- ADIDAS: ADIDAS’s ROIC is reduced between 2020 (6%) and 2019 (24%)
- Comparison: PUMA’s ROIC (10%) is greater than ADIDAS’s ROIC (6%). This shows
that PUMA is using their money to generate returns more effectively than ADIDAS
(2020).
- Despite being in a weak position as having a low ROE, PUMA’s 2020 ROIC shows that
it generated more income from invested capital than ADIDAS. This is favorable when
investors consider this factor instead of just studied the ROEs.
- To improve the ratio, companies should improve their revenue and reduce the burden
from interest expense.
POSITION: Strong
4.6 Basic Earning Power (BEP):

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BEP= EBIT
TotalAssets
2020 2019
PUMA ADIDAS PUMA ADIDAS
EBIT 240.20 787.24 465.40 2,718.00
Total Assets 4,684.10 21,053.00 4,378.20 20,680.00
BEP 5% 4% 11% 13%
- In 2020 For 100 euro invested in total assets, PUMA could earn 5 euro earnings before interest and tax. For 100 euro invested in total assets, ADIDAS could earn 4 euro earnings before interest and tax. In 2019 For 100 euro invested in total assets, PUMA could earn 11 euro earnings before interest and tax. For 100 euro invested in total assets, ADIDAS could earn 13 euro earnings before interest and tax. PUMA: PUMA’s BEP has gotten a worse between 2020 (5%) and 2019 (11%). This result comes
from decreasing in EBIT, increasing in total assets and lower profit margin on sales in 2020, then
PUMA has a lower BEP ratio.
- ADIDAS: ADIDAS’s BEP also has a worse between 2020 (4%) and 2019 (13%). This
result comes from a big reduction in EBIT, increasing in total assets and lower profit
margin in 2020 caused Adidas having a lower BEP ratio.
- Comparison: This ratio shows the raw earning power of the PUMA’s assets before taxes
and debt has a bit better than ADIDAS (2020).
POSITION: Moderate
5. Market Value Ratio
*€ in million

19 | P a g e
5.1 Price/Earning Ratio (P/E)
P/ E= Price per share
Earning per share
2020 2019
PUMA ADIDAS PUMA ADIDAS
Price per share 11,42 32,20 12,42 33,91
Earning per
share
0,52 3,36 1,74 9,57
P/E 21,83016477 9,580856102 7,140243902 3,545122587
- In 2020
 PUMA: Investors are willing to spend 21,83 euro just to get 1 euro profit.
 ADIDAS: Investors are willing to spend 9,58 euro just to get 1 euro profit.
- In 2019
 PUMA: Investors are willing to spend 7.14 euro just to get 1 euro of profit.
 ADIDAS: Investors are willing to spend 21.83 euro just to get 1 euro profit.
- PUMA’s P/E in 2020 is 3 times larger than that of 2019 due to the big cut down for
Earning per Share. PUMA’s stock price hardly affected despite the negative volatile of
EPS showing that the market has strong belief in company’s potentials.
- PUMA’s P/E is larger than ADIDAS’s shows that PUMA is market’s favorite, more
popular in the market, and higher liquidity (2020).
POSITION: Strong
5.2 Market/ Book Ratio (M/B)
*€ in million

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M
B = Market price per share
Book value per share
2020 2019
PUMA ADIDAS PUMA ADIDAS
Marker price
per share
92.28 279.90 68.20 291.95
Book value per
share
11.42 32.20 12.42 33.91
M/B Ratio 8.08x 8.69x 5.49x 8.61x
- PUMA’s M/B ratio in 2020 is greater than which in 2019 (8.59x > 5.49x) demonstrating
it is well regarded by investors or it has lower risks and higher growth.
- The market is overevaluated common shares of both PUMA and ADIDAS. In 2019,
PUMA has M/B (5.49x) < ADIDAS’s (8.61x). This index increased significantly in
2020, by 3.2x more than 2019. Even though this ratio is still lower than ADIDAS’s,
PUMA is more and more preferred in the market.
POSITION: Moderate
C. STOCK PRICE:
Stock price of PUMA increased from 68.20(2019) to 92.28(2020) while ADIDAS fell from
291.95(2019) to 279.90(2020). Therefore if we want to know which stock should be chosen to buy,
we have to decide if we are more a long-term or short-term investor.
ADIDAS has a higher EPS and is less fluctuate then it could be considered as a secure investment
when PUMA with its low EPS and dramatic fluctuation could be considered as a high return one.
As a consequence, if you are looking for a long-term investment from which you could feel secure
and be well-paid then choose ADIDAS. But if you are a risk lover, PUMA is a better candidate.
*€ in million

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D. CONCLUSION:
As a result of the Covid-19 pandemic, the 2020 operating performances of both corporations were heavily
affected. The financial ratios reported had illustrated this standpoint.
1. Liquidity:
Both corporation have a reasonable liquidity refer to current ratio but they should carefully consider
their quick ratios, which are smaller than 1, to make sure they can cover short-term debts.
2. Assets Management:
- PUMA has a faster turn over inventories compare with ADIDAS
- This tells us PUMA has shorter sales periods
- It manages to use fixed assets quite effectively when generating more than 2 euros of sales with 1
euro invested in fixed assets
- It also has good Total Assets turnover ratios.
- Having better performance at the whole of 4 ratios, PUMA can be considered having good
management on assets
3. Debt Management:
- PUMA has lower debt ratio compare with ADIDAS implies that their capital structure is safer with
a considerable portion of holder’s equity.
- PUMA also has a more reliable source to pay interest expenses.
4. Profitability:
- PUMA had handled unfavorable market condition, out passed ADIDAS operating performance and
tightened the distance with its peer's profit performance
- The 2020 pandemic made its income de-escalated, caused its Return on Assets to fall
- It has ROE of both 2019 and 2020 below the standard level for considering as a good investment
- ROICs have decreased for both corporation, but it seems like PUMA had maintained better
management as their money generate returns more effectively than ADIDAS

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- PUMA also has a better Basic Earning Power
5. Market Value:
PUMA is more and more preferable in the market as its M/B increased and as the market willing to
spend 21.83 Euros just to get back 1 Euro of profit.
In short, with the mix of strengths and weaknesses when it comes to financial ratios, it seems that
PUMA will need to adjust their finances in order to remain competitive in the long-term. There are
too many area of weakness to overlook and the financial health of the company is not at its best.

23 | P a g e
E. APPENDIX:
Our data was collected from Yahoo! Finance.com, Google Finance and official websites of PUMA
and ADIDAS.
No. Descriptions From Ratio
calculator
References Pages
PUMA ADIDAS
1 Liquidity Ratios Balance
Sheet
Excel Yahoo!
Finance,
Financial
Report
92 2
2 Asset Management
Ratios
Balance
Sheet,
Income
Statement
Excel Yahoo!
Finance,
Financial
Report
92, 93 2, 3
3 Debt Management
Ratios
Balance
Sheet,
Income
Statement
Excel Yahoo!
Finance,
Financial
Report
92, 93 2, 3
4 Profitability Ratios Balance
Sheet,
Income
Statement
Excel Yahoo!
Finance,
Financial
Report
92, 93 2, 3
5 Market Value
Ratios
Balance
Sheet,
Income
Statement,
Stock Price
history
from
Google
Finance
Excel Yahoo!
Finance,
Financial
Report
92, 93 2, 3