Accounting Financial Analysis Report

Accounting Financial Analysis Report
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Contents
Introduction......................................................................................................................................4
Section 1: Company Profile.............................................................................................................5
1.1: Introduction...........................................................................................................................5
1.2: Data Discussion....................................................................................................................5
1.2.1: History................................................................................................................................5
1.2.2: Product Lines.....................................................................................................................5
1.2.3: Current Position.................................................................................................................5
1.2.4: Company Structure............................................................................................................6
1.2.5: Industry and Main Competitors.........................................................................................6
1.3: Conclusion............................................................................................................................6
Section 2: Company Analysis (Trend Analysis).............................................................................8
2.0: Trend Analysis of Ulta Beauty Inc. and its competitor Estee Lauder Company..................8
2.1: Introduction...........................................................................................................................8
2.2: Discussion of Data................................................................................................................8
2.2.1: Trend Analysis (Trend in Financial Data over the last three years)..................................8
2.2.1.1: Total Revenue.................................................................................................................8
2.2.1.2: Total Profit......................................................................................................................9
2.2.1.3: Total Assets...................................................................................................................10
2.2.1.4: Total Equity..................................................................................................................12
2.3: Results & Conclusion.........................................................................................................12
Section 3: Company Analysis (Ratio Analysis)............................................................................14
3.0: Description, Analysis and Interpretation of Financial Ratios of Ulta beauty in Comparison
to Estee Lauder...........................................................................................................................14
3.1: Introduction.........................................................................................................................14
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3.2: Discussion of Data..............................................................................................................14
3.2.1: Liquidity Analysis............................................................................................................14
3.2.1.1: Current Ratio.................................................................................................................14
3.2.1.2: Quick Ratio...................................................................................................................15
3.2.2: Leverage Analysis (Solvency Analysis)..........................................................................16
3.2.2.1: Debt Ratio.....................................................................................................................16
3.2.2.2: Debt to Equity Ratio.....................................................................................................17
3.2.3: Profitability Analysis.......................................................................................................18
3.2.3.1: Gross profit ratio...........................................................................................................18
3.2.3.2: Net Profit Ratio.............................................................................................................19
3.3: Results & Conclusion.........................................................................................................21
Conclusion.....................................................................................................................................22
References......................................................................................................................................23
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Introduction
The report has been prepared for analyzing the financial health of a selected company,
that is, Ulta Beauty, with the use of technique of trend and ratio analysis. This has been
conducted for examining the strengths and weakness of the company in terms of liquidity,
leverage and profitability. The results obtained are compared with selected competitor for
assessing its competitive position within the industry.
This report has been divided into three parts and they are company profile, trend analysis
and ratio analysis of the selected company (Listed on S&P 500) and comparison with its main
competitor. Each section has its own introduction, discussion and conclusion that provide
information in model used, results, details of spreadsheet and other details.
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Section 1: Company Profile
1.1: Introduction
This part of the report has presented a brief discussion regarding the background of the
selected company that includes discussion about its history, industry trend, product lines and
current competitive position. This section includes an internal analysis of the company by
discussing its competitive position within industry and assessing its future potential of growth
and development.
1.2: Data Discussion
1.2.1: History
Ulta Beauty Inc is a recognized chain of beauty stores within the United States and is
involved in providing wide range of cosmetic products. It has been established in the year 1990
by Richard E. George and Terry Hanson. George has established the business plan for
introducing a retail concept and offering wide range of cosmetics and fragrance products as
compared to other cosmetic retail stores (Maros, 2018). The strong financial performance of the
company supported its growth and profitability and lead to its establishment of it’s about 949
stores across 48 states. The major success factor that contributed to the success of the company is
providing attractive mix of different products supported by good customer experience and
incorporating the use of online communication channels for its higher number of sales. It has
almost completely reinvented its stores since its establishment in the year 1990 by providing
diverse range of beauty products at a single place (Ulta Beauty, 2019).
1.2.2: Product Lines
Ulta Beauty is known to the best retailer within the US that is involved in providing
diverse range of products that includes cosmetics, fragrance, skin and hair products and salon
services. The company is involved in providing different types of beauty products to its
customers that includes from skin care, nails, skin care, hair, bath to different make up products.
It also provides full-service salon services in the segments of hair, skin, brow and make-up
services (Danzier, 2018).
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1.2.3: Current Position
Ulta Beauty is known to be the top most national retailer by providing complete beauty
experience to its customers. It is known to be a leading cosmetic retailer within the US owing to
its high commitment to providing personalized service in the beauty segment. The company has
increased its products lines of cosmetics and fragrance since its establishment. The publicly
traded company has attained a distinctive position in the competitive cosmetic retail market of
the US owing to its higher number of sales supported by evolution and adding up of significant
product lines (Zion Market Research, 2018). It is realizing higher net income at a time in the US
when other retailers are struggling to retain their market share within the cosmetic sector. The
higher sales growth is supported by its good customer experience achieved due to its high quality
online as well as offline products and services (Daily Herald, 2017).
1.2.4: Company Structure
Its organizational structure comprises of establishing divisions in different geographical
areas within the US to offer its products and services. Its different retail stores across different
states within the US to provide its diverse beauty products to the customers. It also provides its
different beauty products to the customers through its online retail channel (Ulta Beauty, 2019).
1.2.5: Industry and Main Competitors
The Beauty and Cosmetic Industry within the US is highly competitive and is dominated
by the presence of large number of competitors. The industry has realized revenue of about $2.4
bn in the financial year 2019 with increase in the number of businesses by 2.6% (Industry
Market Research Report, 2019). The major competitors of Ulta Beauty are Sephora, Oriflame,
Estee Lauder and others cosmetic retail companies. However, it has maintained its distinctive
position within the retail sector by reporting increase in sales of about 17.4% in the year 2018
(Danzier, 2018).
1.3: Conclusion
It is inferred from this section of the report that company Ulta Beauty has attained a
competitive position within the beauty and retail sector of the US owing to high quality and
variety of products offered in the beauty segment. The online retail channel used by it has further
fostered its growth within the cosmetic retailing sector with increase in the number of sales by
reaching to large number of customers. The US cosmetic industry is however highly competitive
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