Financial Analysis of KOSE Corp and Shiseido Co Ltd

The assignment compares the financial performance of KOSE Corp and Shiseido Co Ltd over several periods. It calculates enterprise value, EBITDA, and EV/EBITDA ratios for both companies. The data includes market capitalization, diluted shares, long-term liabilities, cash & equivalents, and current market prices.

Financial Analysis

TABLE OF CONTENTS
1. INTRODUCTION.......................................................................................................................1
1.1 Industry overview..................................................................................................................1
1.2 Company overview................................................................................................................1
1.2.1 KOSE Corp.........................................................................................................................1
1.2.2 Shiseido Co Ltd..................................................................................................................2
1.3 Approach and methodology...................................................................................................2
2. REVIEW ANALYSIS OF MANAGEMENT &DIRECTOR’S REPORT.................................2
2.1 Disclosure and announcement by the companies..................................................................2
2.2 Review of auditor’s report.....................................................................................................2
2.3 Forecasts and potential investment strategies........................................................................3
3. FINANCIAL STATEMENT ANALYSIS..................................................................................4
3.1 Background............................................................................................................................4
3.2 Business analysis...................................................................................................................4
3.3 Analysis of key performance indicators................................................................................5
3.3.5 Trend analysis or share price movement..........................................................................17
3.3.6 Common size financial statement analysis.......................................................................18
3.3.7 Altman Z score.................................................................................................................19
4. REVIEW OF LATEST DEVELOPMENTS............................................................................19
4.1 Market news, trends and developments...............................................................................19
4.2 Internal and external factors................................................................................................20
5. SUMMARY AND RECOMMENDATIONS...........................................................................20
REFERENCES..............................................................................................................................21
APPENDIX....................................................................................................................................23
Income statement of KOSE Corp as at March2015.................................................................23

Income statement of KOSE Corp as at March2016 & 2017....................................................25
Balance sheet of KOSE Corp as at March 2015.......................................................................27
Balance sheet of KOSE Corp as at March 2016 & 2017.........................................................29
Income statement of Shiseido Co Ltdas at March 2015...........................................................36
Income statement of Shiseido Co Ltdas at December 2015& 2016.........................................37
Balance sheet of Shiseido Co Ltd as at March 2015................................................................38
Balance sheet of Shiseido Co Ltd as at December 2015& 2016..............................................40
6. Ratio analysis of Shiseido Co Ltd.........................................................................................45
7. Common size financial statement analysis............................................................................47
8. EV/ EBITDA ratio.................................................................................................................47

1. INTRODUCTION
1.1 Industry overview
Porter five forceanalysis of personal care products sector:
Bargaining power of buyers
From assessment, it has been identified that in the
cosmetic sector customer’s have high bargaining
power. The main reasons behind such high power
arehigh competition and availability of
manufactures which offer beauty products.
Bargaining power of suppliers
Cosmetic sector of is filled up with the low
bargaining power of suppliers. Large number of
market players and supply of diversified products is
one of the main reasons behind the decreasing
power.
Threat of substitutes
In \the concerned sector, high level of threat exists
from the substitute products. Hence, if
manufacturers will charge higher prices and
compromise with the quality aspect then there is a
risk that customers switch on others.
Threat from new entrants
Low threat exists in the personal care products
sector due to high cost, resource requirements s etc.
Besides this, in the cosmetic industry, due to the
aspect of customer loyalty it is not possible for the
new entrant to survive.
Competition intensity: In the cosmetic sector, competitive rivalry is highbecause there are leading
companies which provide customers with high quality personal care products. It includesShiseido Co Ltd,
Kao, Mandom, KOSE, MoltonBrown etc.
1.2 Company overview
For the present report, two companies have been selected namely KOSE Corp and
Shiseido Co Ltd. Brief introduction of such companies are enumerated below:
1.2.1 KOSE Corp
KOSE Corporation is one of the leading Japanese company which operates at global
level. It offers personal care products to the customers such as cosmetic, skin and hair care.
Further, to assess the financial position and performance of KOSE in against to the competitor
Shiseido has been considered.

1.2.2 Shiseido Co Ltd
Shiseido is known as the producer of quality skin and hair care, cosmetic and fragrance
related products. Such Japanese company has secured first position in Japan and fifth in the
world. Both the companies which are undertaken for the study listed on and traded through
Tokyo stock exchange.
1.3 Approach and methodology
With the motive to evaluate financial results of KOSE over the rival firm such as
Shiseido Co Ltddata has been gathered through the annual reports of such companies. Hence, by
accessing incomestatement and balance sheet of KOSE as well as Shiseido, pertaining to 5 years
from 2012 to 2016, data has been gathered. Along with this, to present the better view ofissue
latest economic developments and company’s latest announcements as well as forecasts have
also been evaluated. Hence, main source of information considered for the present study are as
follows:
 Annual reports of KOSE and Shiseido
 Journals and articles related personal care sector
2. REVIEW ANALYSIS OF MANAGEMENT &DIRECTOR’S REPORT
2.1 Disclosure and announcement by the companies
On 4th March 2014, KOSE announced that it has signed agreement in relation to
acquiring 14856 shares. This aspect shows that KOSE stake in Tarte accounts for 93.5%
respectively whose value is Japan yen135 significantly.
2.2 Review of auditor’s report
Auditor’s report of KOSE Corp shows that financial statements of the concerned
organization are free from errors. Besides this, auditors entailed in their report that company has
made fair distribution of benefits among the shareholders and other stakeholders.
Corporate governance report of KOSE Corp shows that enhancement of the group’s
value is one of the main objectives of the company. Hence, business unit communicates all the

business aspects to the concerned stakeholders by ensuring high level of transparency and
fairness. This in turn provides assistance to the firm in establishing effectual and trustful
relationship with the stakeholders (Corporate governance, 2017). In addition to this, for
managing risk specific committee has developed by the firm.Along with, external auditor has
appointed by the firm to present the fair view of financial performance.
(Source: Corporate governance, 2017)
2.3 Forecasts and potential investment strategies
On the basis of current performance, market trend as well as SWOT analysis, it is
estimated that in the near future KOSE corp. will take entry in the developing countries and
thereby attain high margin.

3. FINANCIAL STATEMENT ANALYSIS
3.1 Background
For the purpose of financial evaluation, ratio analysis technique has been undertaken for
getting deeperinsight or quick indication about thecompany’s performance. In furnishes
informationregarding the several key areas such as profitability, efficiency, investment, liquidity
and solvency. Thus, to summarize the financial position ofKOSE over the years and in
comparison to the competitor such as Shiseido ratio analysis tool has been employed.
3.2 Business analysis
SWOT analysis of KOSE Corporation
Strengths
 Effectual control on cost (labor)
 Highly skilled and efficient workforce
(KOSE Corporation SWOT Analysis
Overview, 2017)
 Sound quality management
Weaknesses
 Less emphasis on R&D
 Lower level of focus on promotional
campaign or aspects
Opportunities
 Enhance customer base and profit
margin by taking entry in emerging
economies
 Company has opportunity to grab high
market share through innovation and
offering new products as well as
services to the customers.
Threats
 Changing rules and regulations
 Presence of strong competitors
SWOT analysis of Shiseido Co Ltd
Strengths Weaknesses

 Effective management
 Sound customer base
 Quality management
 Market leader (Shiseido Company,
Limited SWOT Analysis, 2017)
 Lack of training & development
session
 Lack of R&D program
Opportunities
 Expansion of business operations in
global market through mergers and
acquisition
Threats
 Government rules and regulations
3.3 Analysis of key performance indicators
3.3.1 Profitability ratios
Return on equity (ROE) Mar
2015
Dec
2015
Dec
2016
Sep2017
Interim
Unaudited
KOSE Corp
Net income / shareholders
equity 10.25% 13.84% 13.16% 10.20%
Shiseido Co
Ltd
9.58% 6.32% 8.19% 9.47%

Interim
Unaudited
Mar-15 Dec-15 Dec-16 Sep-17
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
KOSE Corp
Shiseido Co Ltd
Interpretation: The above depicted table shows that ROEof KOSE lies within the range
of 10.20% to 13.84% during the concerned years taken for investigation.In addition to this,
Shiseido’s ROIC showed fluctuated trend within the period of March 2015 to September 2017.
During the interim period, rate of return of Shiseido Co Ltd accounts for 9.47%% respectively
which is higher as compared to year ending on 2015 & 2016. Hence, by considering the outcome
of ROE, it can be presented that KOSE Corp have made effectual use of shareholder’s fund. This
aspect can clearly be supported with the increasing trend assessed in ROE of KOSE. Along with
this, findings of such evaluation can clearly be supported with SWOT analysis which shows that
effective management, sound financial planning and quality maintenance are the key strengths of
KOSE Corp and Shiseido Co Ltd. Further, increasing trend shows that strategic management of
the company is sound (KOSE Company, Limited SWOT Analysis. 2017). Thus, it can be stated
from overall evaluation that KOSE Corp has generated higher margin over the invested capital in
comparison to Shiseido.
Net profit ratio = Net profit /
net sales * 100 Mar
2015
Dec
2015
Dec
2016
Sep2017
Interim
Unaudited
KOSE
Corp
6.4% 11.1% 10.7% 11.6%
Shiseido Co 4.33% 3.04% 3.78% 4.69%

Ltd
Interim
Unaudited
Mar-15 Dec-15 Dec-16 Sep-17
0.00%
100.00%
200.00%
300.00%
400.00%
500.00%
600.00%
700.00%
800.00%
900.00%
Shiseido Co Ltd
KOSE Corp
Graphical presentation shows that NPmargin of KOSE Corp inclined from 6.4% to 11.6%
at the end of September2017. On the other side, fluctuating trend has been identified in NP
margin of Shiseido Co Ltd during the concerned three years. This aspect shows that due to
having high level of indirect expenses Shiseido Co Ltd failed to generate high margin from 2012
to 2014. Unaudited financial statement of Shiseido shows that NP margin of the firm increased
from 4.33% to 4.69% respectively. However, still net margin generated by Shiseido ltd is highly
lower as compared to the rival firm. Thus, for enhancing NP margin business unit is required to
employ budgetary control techniques which in turn helpin assessing deviations and thereby gives
indication for improvement. In conclusive way, it can be presented that profitability aspect of
KOSE Corp is good over the rival firm.

3.3.2 Efficiency ratios
31/3/2015 31/12/2015 31/12/2016 30/8/2017
0
1
2
3
4
5
6
Fixed assets turnover ratio
in times
Interpretation: Graph depicted above clearly shows that fixed assets turnover ratio of
KOSE declined from 1.92to 1.69 times which is a good indicator for the firm. On the other side,
fluctuated and decreasing trend has been assessed in the fixed asset turnover ratio ofShiseido.
Tabular presentation clearly exhibits that,in FY ending on March 2015, fixed assets turnover
ratio of Shiseido Ltd was 2.95 times, whereas in interim period such ratio accounts for 1.89 times
respectively.Thus, considering the overall trend it can be said that both the companies failed to
make optimumuse of assets during the concerned years.Business analysis results show that, in
KOSE and Shiseido, there is a lack of effective training session (Shiseido Company, Limited
SWOT Analysis. 2017). This is one of the main reasons behind decreasing pattern of fixed assets
turnover because training session persuades personnel about the manner in which they need to
carry out activities more effectively. Along with, lack of proper maintenance of assets may
another cause of declining FA ratio. Thus, for improving such ratio firms need to take strategic
measureregarding organizing training session etc.
Inventory turnover ratio: COGS /
average stock Mar
2015
Dec
2015
Dec
2016
Sep2017
Interim
Unaudited
KOSE
Corp
2.95 2.53 2.72 1.89

Shiseido
Co Ltd
1.84 1.85 1.79 1.23
31/3/2015 31/12/2015 31/12/2016 30/8/2017
2.95
2.53 2.72
1.891.84 1.85 1.79
1.23
Inventory turnover ratio
KOSE Corp Shiseido Co Ltd
Interpretation: From the financial statementanalysis, it has been assessed thatstock
turnover ratio of KOSE&Shiseidois showing fluctuatingtrend in the performance. This aspect
shows thatstock of both the companies wasnot sold more frequently. From macro analysis, it has
been assessed that high level of competition takes place in the cosmetic sector. Further, internal
analysisexhibits that business unit lays lessemphasis onpromotional aspect or campaign. Hence,
bydeveloping promotional strategies firm can increase the demand of customers and thereby
would become able to improve such ratio.
3.3.3Liquidity and solvency
Current ratio = Current
assets / current liabilities Mar
2015
Mar
2016
Mar
2017
Sep2017
Interim Unaudited

KOSE
Corp
2.97 2.79 3.07 3.12
Mar
2015
Dec
2015
Dec
2016
Shiseido
Co Ltd
1.56 1.99 1.80
1.90 (Financial statements of
Shiseido Co, 2017)
Interim
Unaudited
Mar-15 Mar-16 Mar-17 Sep-17
2.6
2.7
2.8
2.9
3
3.1
3.2
KOSE Corp
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Shiseido Co Ltd

Interpretation: Outcome of ratio analysis clearly shows fluctuating trend in current ratio
of KOSE Corp. In the accounting year ending on March 2015, current ratio accounted for .97,
whereas in the interim period it implies for 3.12:1 respectively.On the other side, current ratio of
Shiseido Co Ltd lies within the range of 1.56 to 1.99from 2015 to 30th September 2017.Hence,
by keeping in ideal ratio such as 2:1, it can be said that both the companies are capable in
relation to meeting their current obligations on time. However, on the basis of comparative
analysis it can be presented thatliquidity position of KOSE Corp is sound. Current ratio of KOSE
Corpsuch as 3.12 times clearly shows thatit has maintained high current assets in comparison to
the ideal standard. Thus, rather than retaining additional assets business unit should make focus
on investing funds in the developing countries. This in turn offers opportunity to the firm in
relation to serving more customers and attaining high margin.
Debt-equity ratio: Long-term debt /
shareholder’s equity Mar
2015
Mar
2016
Mar
2017
Sep2017
Interim
Unaudited
KOSE
Corp
0.08
0.12 0.09 0.08
Mar
2015
Dec
2015
Dec
2016
Sep2017
Interim
Unaudited
Shiseido
Co Ltd
0.09 0.18 0.27 0.20

Interim
Unaudited
Mar-15 Mar-16 Mar-17 Sep-17
0
0.02
0.04
0.06
0.08
0.1
0.12
KOSE Corp
Interim
Unaudited
Mar-15 Dec-15 Dec-16 Sep-17
0
0.05
0.1
0.15
0.2
0.25
0.3
Shiseido Co Ltd
Shiseido Co Ltd
Interpretation: The above depicted table shows that from 2015 to 2017 business unit has
fulfilled its financial needs from equity sources rather than debt instruments. It can be seen in the
graph that debt-equity ratio of KOSE Corp lies within the range of 0.08 to 0.12 which is highly
lower than the ideal ratio or standard . On the other side, debt-equity ratio of Shiseido increased
from .09 to .20 during the financial year’s from2015 to30th September 2017. Hence, in
comparison to the ideal ratio such as .5:1, it can be depicted that solvency position of both the
companies was not good. Moreover, Shiseido has taken resort of equity sources for raising funds
as compared to debt sources. This aspect closely influences both solvency positionsof boththe
firms.Thus, both KOSE and Shiseido should keep in mind the ideal ratio whilemaking selection

of funding sources. Hence, concerned companies should issue 1 debt in against to 2 equities
which in turn help it in creating optimal capital structure andmaintaining enough profitability.
3.3.4 Investment ratios
Particulars Formula
Mar
2015
Dec
2015
Dec
2016
Sep2017
Interim
Unaudited
Earnings per share: Net income – preferred dividend / Number of shares outstanding
KOSE Corp
232.35 347.21 360.95 294.72
Shiseido Co
Ltd 84.38 58.17 80.25 -42.50
Interim
Unaudited
Mar-15 Dec-15 Dec-16 Sep-17
0
50
100
150
200
250
300
350
400
450
500
Shiseido Co Ltd
KOSE Corp
Particulars Formula
Mar
2015
Dec
2015
Dec
2016
Sep2017
Interim
Unaudited
Dividend per share
KOSE Corp
Net income / number of
outstanding shares
64 64.00 84.00 110.00
Shiseido Co
Ltd 20 20 20 22.5

Interim
Unaudited
Mar-15 Dec-15 Dec-16 Sep-17
0
20
40
60
80
100
120
KOSE Corp
Shiseido Co Ltd
Particulars Formula
Mar
2015
Dec
2015
Dec
2016
Sep2017
Interim
Unaudited
P/E ratio
KOSE Corp
Market price per share /
EPS
28.10 32.14 26.90 43.74
Shiseido Co
Ltd 25.75 43.48 36.86 -101.67
Interim
Unaudited
Mar-15 Dec-15 Dec-16 Sep-17
-80
-60
-40
-20
0
20
40
60
80
100
Shiseido Co Ltd
KOSE Corp
Interpretation: Results of evaluation shows thatEPSof KOSE is higher as compared to
Shiseido to a great extent. In 2016, EPS of KOSE and Shiseido accounted for 360.95&80.25

respectively. By considering this, it can be stated that KOSE is offering high return to the equity
investors and thereby make value addition in their money. Besides this, DPSofShiseido was
constant such as 20 JPY in 2015 and2016. In contrast to this, interim report of Shiseido Co Ltd
shows that dividend offered by the company to its shareholders accounted for 22.5.On the other
side,KOSE provided shareholders with increasing dividend which in turn increases the brand
image significantly. It shows that inaccordance with the increasing profitability aspect enough
returns are offered by the company to its shareholders.
Fluctuating trend exists in the PE ratio of both the companies such as KOSE Corp and
Shiseido Co Ltd. From evaluation, it has identified that in the FY ending at 31st December 2015
and 2016, value of Shiseido Co Ltd was higher as compared to its relative value per share. On
the other side, interim unaudited report shows thatin the FY 2017, share prices of Shiseido Co
Ltd is higher in comparison toit’s per share earnings. This aspect presents that share prices of
Shiseido co Ltd are undervalued as per the interim report.
EV/ EBITDA ratio
KOSE
Corp Mar-15 Mar-16 Mar-17 Sep-17
Enterpr
ise
value
331
,616 585,268 532,395 673,116
EBITD
A 22,647 34,634 39,160 23,467
EV/
EBITD
A
2
2647/331616=14.64
34634/58
5268=16.90
39,160/53
2395=13.60
23,467/6
73116=28.68

Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
0
5
10
15
20
25
30
35
EV/ EBITDA of KOSE CORP
EV/ EBITDA of KOSE CORP
Shiseido Co Mar-15 Dec-15 Dec-16 Sep-17
Enterprise value
933,77
7 1,080,728 1,337,107
1,915,28
1
EBITDA 27,614 37,660 36,780 70,654
EV/ EBITDA
933,
777 /27614=33.82
1,080,72
8
/37660=28.70
1,337,107
/36780=
36.35
1,91
5,281
/70654=27.11

Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
0
5
10
15
20
25
30
35
40
EV/ EBITDA of Shiseido Co Ltd
EV/ EBITDA of Shiseido Co
Ltd
Interpretation: Graphical presentation shows that enterprise value of KOSE Corp is
showing increasing trend or pattern. By considering this, it can be stated that on the basis of
performance value of the company’s is continuously increasing. On the other side, after the
period of Dec-2016, enterprise value of Shiseido Co Ltd decreased significantly in against to
EBITDA which is not a good indicator. Hence, it can be presented that in this category
performance of KOSE is good in against to the competitors.
3.3.5 Trend analysis or share price movement
Date
KOSE
Corp share
price
Shiseido
Compan
y,
Limited
share
prices
Dec-12 1795 1139
Dec-13 3340 1691
Dec-14 4865 1693
Mar-15 6530 2173
December 2015 11160 2529
December 2016 9710 2958
1-Sep-17 12890 400

Dec-12
Dec-13
Dec-14
Mar-15
December 2015
December 2016
1-Sep-17
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1795 3340 4865
6530
111609710
12890
1139
1691 1693
2173
2529 2958
4231
Share price trend or movement
Shiseido Company, Limited
share prices
KOSE Corp share price
Interpretation: The above depicted graph shows significant inclining trend in the share
prices of both KOSECorp and Shiseido Co Ltd from December 2012 to September 2017.On
December 2012, share price of KOSE was 1795 JPY, whereas on September 2017 it implies for
12890 JPY. Further, it has assessed from evaluation that share prices of Shiseido moved from
1139 JPY to 4231 within the period of 3 years. Thus, considering trend shows that firm has
developed its effective image at market place and in the mind of investors.
3.3.6 Common size financial statement analysis
Referring appendix 7
Interpretation In case of KOSE GP percentage is stable at 75% to 76% which is good
for the firm and total operating expenses reduced from 64.7% to 56.52% which reflect efficiency
of management to control expenses in business. Operating income increase from 10.9% to
16.23% in the business and EBIT also elevate from 11% to 16.52% which indicate that firm give
fabulous performance in its business. On the other side, common size statement of Shiseido Co
Ltd clearly reflects that contribution of GP in sales accounts for 75%, whereas at the end of
September 2017, it accounts for 77%. However, total operating expenses decreased from 71% to
67% at the end of interim period. Further, operating income level of Shiseido Ltd also
inclinedsignificantly in business from 4% to 10% which shows effectual control of firm on
expenses. EBT of the company declined from 6% to -1% which is reflecting that efficiency of

firm reduced and due to less control and huge amount of expenditure made less profit is earned
in business.
3.3.7 Altman Z score
Symbol
of
formula
Ratio KOSE Corp
(March 2017) Shiseido (December 2016)
A Working capital / total
assets
116041 / 247191
= .47 197061/946007=.21
B Retained earnings / total
assets
157205 / 247191
= .64 258005/946007=.27
C EBIT / total assets 39160 / 247191
= .16 36780/946007=.04
D Market capitalization / book
value of debt
573990/14027 =
40.92 1688169/ 104022 = 16.23
E Sales to total assets 266762 / 247191 =
1.08 850306/ 946007 =.90
Sum of
Score
(A to E)
43.27
17.65
Interpretation: Considering the above depicted score of KOSE Corp and Shiseido Co it
can be stated that companies are unlikely to collapse and there is no imminent danger as it is
above the range of 2.99.
4. REVIEW OF LATEST DEVELOPMENTS
4.1 Market news, trends and developments
By doing assessment of recent trends and development it has been identified that KOSE
Corp is making focus on its long-term vision such as 2020. Hence, the roadmap of
suchmanagement plan lays high level of emphasis on three phases such as V shaped turnaround,
building, strengthening and expanding global brands (Medium-term Management Plan, 2017).

(Source: Medium-term Management Plan, 2017)
4.2 Internal and external factors
Internal and external factors alsohave significant impact on thefinancial position as well
as performance of firm. For thispurpose, SWOT and PESTLE analysis has beenconductedto
assess theextent to which different factors have impact on the performance of KOSE. Hence, by
doing assessment, it has been assessed that sound planning and quality management is one of the
main strengths of KOSE. Further, by making focus on innovation and expanding business
operations in the developing countriesfirm would become able to generate high margin. In
addition to this, by doing evaluation it has been assessed that bargaining power of buyers are
high in the cosmetic sector, whereas contradictory situationtakes place in the case of suppliers.
Academic theory
These are the theories which are based on Logical and rational reasoning behind it. this
can be belongs to the capital assets pricing model and efficient market hypothesis which are
based on the rational assumptions. This helps in determining the behavior or reaction of investors
while making the investment decisions. However, investors do not behave in as predictable or
rational manner which are indicated by quantitative models. Therefore, it belongs to the
psychological factors which are based on of conventional techniques of assessing the
investments' behavior. Individual make investments or monetary transaction in any organization
in consideration of having the profitable returns. Thus, it can be said that they only pay attention
over profitability and the returns they will about to have from their investments.

5. SUMMARY AND RECOMMENDATIONS
From the above report, it has been concluded that high level of competitors are available
in theJapanese cosmetic sector. On the basis of such aspect, business unit can attain successby
offering innovative products or services to the customers. Besides this, it can be inferred from
the financial analysis that profitability, liquidity and solvency aspect of KOSE is sound as
compared to its competitor.Further, it has been articulated that KOSE is offering higher returns
to the investors in against to Shiseido. Along with this, it can be stated that long term vision will
make remarkable contribution in the growth and success of KOSE Corp.
Recommendations
 It is recommended to the management team of KOSE to undertake inventory control
tools and techniques such as EOQ, JIT etc. By doing this, firm can exert control
onholding or storage cost and thereby would become able to generate high margin.
 Along with this, KOSE should include both equity and debt in financial structure for
developing the optimal one. Hence, by undertaking such aspect Shiseido can strengthen
its solvency position to the significant level.
On the basis of overall evaluation, it can be presented that outcome of profitability, liquidity and
investment ratios pertaining to KOSE Corp is good as compared to Shiseido Co ltd. The main
objective of an investor behind making an investment is to earn higher return. Thus, considering
the current performance it can be stated that in the near future KOSE Corp will offer higher
return to the shareholders.

REFERENCES
Online
KOSE Corporation SWOT Analysis Overview. 2017. [Online]. Available through:
<https://www.swotanalysis24.com/swot-k/62322-swot-analysis-kose-corporation.html >.
Shiseido Company, Limited SWOT Analysis. 2017. [Online]. Available through:
<https://www.swotanalysis24.com/swot-s/97971-swot-analysis-shiseido-
companylimited.html>.
Medium-term Management Plan. 2017. [Online]. Available through:
<=http://www.kose.co.jp/company/en/info/mid/>.
Corporate governance. 2017. [Online]. Available through: <
http://www.kose.co.jp/company/en/info/governance/>.
Financial statements of KOSE Corp. 2017. [Online]. Available through: <
http://financials.morningstar.com/balance-sheet/bs.html?t=4922&region=jpn&culture=en-
US>.
Financial statements of Shiseido Co Ltd. 2017. [Online]. Available through: <
http://financials.morningstar.com/balance-sheet/bs.html?t=4911&region=jpn&culture=en-
US>.

APPENDIX
Income statement of KOSE Corp as at March2015

Income statement of KOSE Corp as at March2016 & 2017

Balance sheet of KOSE Corp as at March 2015

Balance sheet of KOSE Corp as at March 2016 & 2017

Pls see Kose have long term debt, pls add in

Income statement of Shiseido Co Ltdas at March 2015

Income statement of Shiseido Co Ltdas at December 2015& 2016

Balance sheet of Shiseido Co Ltd as at March 2015

Balance sheet of Shiseido Co Ltd as at December 2015& 2016

Particular
s Mar-15 Mar-16 Mar-17 Sep-17
Profitability ratios
Net profit 13244 19,791 20,574 16,799
Net sales 207821 178,457 192,332 144,615
Shareholde
rs’ equity 129,203 142,999 156,311 164,672
Return on
equity
Net income / shareholders
equity
13244/12
9203=10.
25%
19791/142
999=3.84
%
20574/15
6311=13.
16%
16799/16
4672=10.
20%
NP ratio Net profit / net sales * 100
13244/20
7821=6.4
%
19791/178
457=11.1
%
20574/19
2332=10.
7%
16799/14
4615=11.
6%
Liquidity ratios
Current
assets 134,476 161,351 172,074 175,665
Current
liabilities 45,207 57,766 56,033 56,317
Current
ratio
Current assets / current
liabilities
134,4764
5207=2.9
7
161,351/5
7,766=2.7
9
172,074/5
6,033=3.0
7
175,665/5
6317=3.1
2
Solvency ratio analysis
Debt 10,160
16,965 14,027 12,886
Shareholde
rs’ equity 12,9203 143,626 159,348 164,672
Debt-
equity ratio
Long term debt /
shareholders equity
10,160/12
,9203 =
0.08
16,965 /
143,626 =
0.12
=14,027/1
59,348=
0.09
12,886/16
4,672 =
0.08
Efficiency ratio analysis
sales 207821 178457 192332 144615
Fixed
assets 70,530 70,560 70,787 76,527
Inventory 28,099 35,572 38034 50996
COGS 50,763 42,663 47,041 39,403
Net sales 207821 178457 192332 144615
Fixed
assets
turnover
207821/7
0530=
2.95
178457/70
560=2.53
192332/7
0787=2.7
2
144615/7
6527=1.8
9

ratio
Inventory
turnover
ratio
50,763/28
099=1.81
42,663/35
572=1.20
47,041/38
034=1.24
39,403/50
996= 0.77
Investment ratios
Net profit 13244 19,791 20,574 16,799
Market
price per
share 6530 11160 9710 12890
Total
dividends
paid 3648 3648 4788 6270
Earnings
per share
Net income – preferred
dividend / Number of shares
outstanding
13244/57
=232.35
19,791/57
=347.211
20,574/57
=360.947
16,799/57
294.719
Dividend
per share
Net income / number of
outstanding shares
3648/57/6
4
3648/57=
64.00
4788/57=
84.00
6270/57=
110.00
P/E ratio Market value per share / EPS
6530/232.
5=28.10
11160/347
.21=32.14
9710/360.
95=26.90
12890/29
4.72=43.7
4
6. Ratio analysis of Shiseido Co Ltd
Particulars Formula Mar-15 Dec-15 16-Dec
Interim sep-
17
Profitability ratios
Net profit 33668 23210 32101 -16958
Net sales 777687 763058 850306 731,201
Shareholders’
equity 351,308 366,999 392033 366,473
Return on
equity
Net income /
shareholders equity
33668/3513
08=9.58%
23210/3669
99=6.32%
32101/3920
33=8.19%
-
16958/3664
73=-4.63%
NP ratio
Net profit / net sales
* 100
33668/7776
87=4.33%
23210/7630
58=3.04%
32101/8503
06=3.78%
-
16958/7312
01=-2.32%
Liquidity ratio analysis
Current assets 415,069 410,673 443748 501,892
Current 265,381 206,784 246687 264,741

liabilities
Current ratio
Current assets /
current liabilities
415,069/26
5381=1.56
410,673/20
6784=1.99
443748/246
687=1.80
501,892/264
741=1.90
Solvency ratio analysis
Debt 31281 67617 104022 71,723
Shareholders’
equity 351,308 366,999 392033 366,473
Debt-equity
ratio
Long term debt /
shareholders’ equity
31281/351,
308=0.09
67617/366,
999=0.18
10402
2/392033=
0.27
71,723/366,
473=0.20
Efficiency ratio analysis
Fixed assets 405,478 397,874 502,687 432,844
Inventory 106,696 105,928 115672 136,877
COGS 196,433 196,009 207553 168,398
Net sales 777687 763058 850306 731201
Fixed assets
turnover ratio
777687/405
478=1.92
763058/397
874=1.92
850306/502
687=1.69
731201/432,
844=1.69
Inventory
turnover ratio
196,433/10
6696=1.84
196,009/10
5,928=1.85
207553/115
672=1.79
168,398/136
,877=1.230
Investment ratios
Net profit 33668 23210 32101 -16958
Market price
per share 2173 2529 2958 4321
Total
dividends
paid 7980 7980 8000 8977.5
Earnings per
share
Net income –
preferred
dividend / Number
of shares
outstanding
33668/399
=84.38
23210/399=
58.17
32101/400
=80.25
-
16958/399=-
42.50
Dividend per
share
Net income /
number of
outstanding shares
7980/399=
20
7980/399=2
0
8000/400=
20
8977.5/399=
22.5
P/E ratio Market value per 2173/84.38 2529/58.17 2958/80.25 4321/-

share / EPS =25.75 =43.48 =36.86
42.50=-
101.67
7. Common size financial statement analysis
KOSE Corp
Particulars
Mar-
15 %
Dec-
15 %
Dec-
16 % Sep-17 %
Revenue
20782
1
100
%
178,45
7 100%
192,33
2 100%
144,61
5 100%
GP
157,05
8
75.6
%
135,79
3
76.09
%
145,29
0
75.54
%
105,21
1
72.75
%
Total operating
expenses
134,41
0
64.7
%
105,46
1
59.10
%
115,11
3
59.85
% 81,743
56.52
%
Operating income 22,648
10.9
% 30,332
17.00
% 30,177
15.69
% 23,468
16.23
%
Interest expense 8 0.0% 8 0.00% 3 0.00% 3 0.00%
Other income
(Expense) 1054 0.5% 591 0.33% 906 0.47% 419 0.29%
Income before tax 23694
11.4
% 30,915
17.32
% 31,080
16.16
% 23,884
16.52
%
Shiseido Co Ltd
Particulars
Mar-
15 % Dec-15 % Dec-16 % Sep-17 %
Revenue
777,68
7 100%
763,05
8 100%
850,30
6 100%
731,20
1 100%
GP
581,25
4 75%
567,04
8
74.31
%
642,75
3
75.59
%
562,80
3 77%
Total operating
expenses
553,64
0 71%
529,38
8
69.38
%
605,97
2
71.27
%
492,14
8 67%
Operating income 27,614 4% 37,660 4.94% 36,780 4.33% 70,654 10%
Interest expense 1,207 0% 809 0.11% 814 0.10% 587 0%
Other income 22,631 3% 6,041 0.79% 13,900 1.63% -74420 -10%

(Expense)
Income before tax 49,038 6% 42,892 5.62% 49,866 5.86% -4353 -1%
8. EV/ EBITDA ratio
KOSE Corp
FY ended on March 2015
Enterprise Value (EV)
Current Market Price 6,530
Diluted Shares 57
Market Capitalization 372,210
Long Term Liabilities 10,160
Less: Cash & Cash Equivalents 50,754
Enterprise Value 331,616
FY ended on March 2016
Enterprise Value (EV)
Current Market Price
10,90
0
Diluted Shares
5
7
Market Capitalization
621,30
0
Long Term Liabilities 16,965
Less: Cash & Cash Equivalents 52,997
Enterprise Value
585,26
8
FY ended on March 2017
Enterprise Value (EV)
Current Market Price
10,07
0
Diluted Shares 5

7
Market Capitalization
573,99
0
Long Term Liabilities 14,027
Less: Cash & Cash Equivalents 55,622
Enterprise Value
532,39
5
Interim period (September 2017)
Enterprise Value (EV)
Current Market Price
12,89
0
Diluted Shares
5
7
Market Capitalization
734,73
0
Long Term Liabilities 12,886
Less: Cash & Cash Equivalents 74,500
Enterprise Value
673,11
6
KOSE Corp Mar-15 Mar-16 Mar-17 Sep-17
Enterprise value
331,61
6
585,26
8
532,39
5
673,11
6
EBITDA 22,647 34,634 39,160 23,467
EV/ EBITDA
14.6
4
16.9
0
13.6
0
28.6
8
Shiseido Co Ltd
Shiseido Co Mar-15 Dec-15 Dec-16 Sep-17
Enterprise value
933,77
7
1,080,72
8
1,337,10
7
1,915,28
1
EBITDA 27,614 37,660 36,780 70,654
EV/ EBITDA
33.8
2
28.7
0
36.3
5
27.1
1

March 2015
Enterprise
Value (EV)
Current Market Price 2173
Diluted Shares 399
Market Capitalization 867,027
Long Term Liabilities 170,353
Less: Cash & Cash
Equivalents 103,603
Enterprise Value 933,777
December 2015
Enterpris
e Value
(EV)
Current Market Price 2529
Diluted Shares 399
Market Capitalization
1,009,07
1
Long Term Liabilities 188,428
Less: Cash & Cash
Equivalents 116,771
Enterprise Value
1,080,72
8
December 2016
Enterpris
e Value
(EV)
Current Market Price 2958
Diluted Shares 400
Market Capitalization 1,183,20

0
Long Term Liabilities 274,033
Less: Cash & Cash
Equivalents 120,126
Enterprise Value
1,337,10
7
Interim period (September 2017)
Enterpris
e Value
(EV)
Current Market Price 4231
Diluted Shares 399
Market Capitalization
1,688,16
9
Long Term Liabilities 275,326
Less: Cash & Cash
Equivalents 48,214
Enterprise Value
1,915,28
1