Manage Operations and Finance Analysis 2022

Running head: MANAGE OPERATIONS AND FINANCE
Manage Operations and Finance
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MANAGE OPERATIONS AND FINANCE1
Table of Contents
Chapter 1: Operational Analysis...................................................................................3
1: Introduction:..........................................................................................................3
2: Industry Analysis:..................................................................................................3
3: Company overview:..............................................................................................4
4: Business strategy:.................................................................................................6
5: Operational Analysis:............................................................................................7
Chapter 2 Evaluation of performance...........................................................................8
1: Financial performance..........................................................................................8
Table 1: Net profit margin...................................................................................8
Table 2: Operating return on equity......................................................................9
Table 3: Return on capital employed..............................................................10
2: Risk analysis.......................................................................................................11
Table 5: Current ratio........................................................................................11
Table 6: Debt equity ratio.................................................................................12
Table 7: Operating leverage................................................................................13
3: Managerial Performance.....................................................................................14
Table 8: Asset turnover....................................................................................14
Table 9: Inventory turnover..............................................................................16
Table 10: Debt collection period......................................................................17
4: Market Performance:..........................................................................................17
Table 11: Earnings per Share...........................................................................18
Table 12: Price-Earnings per share....................................................................19
Table 13: Dividend Yield.....................................................................................19
6: Sustainability and CSR:..........................................................................................20
7: Conclusion:.............................................................................................................21
References:................................................................................................................22

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Appendix A: Adidas:...................................................................................................24
Appendix B: PUMA.....................................................................................................26

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Chapter 1: Operational Analysis
1: Introduction:
The analysis of financial statement is regarded as the procedure of reviewing
and assessing an organization’s financial statement in order to make improved
financial decision for better future income (Schroeder, Clark and Cathey 2019). The
external stakeholders normally make use of financial reports to gain an
understanding of overall financial health of the company for evaluating the financial
performance and business values.
Adidas AG is the multinational company, founded and having its headquarter
in Germany. The company designs and manufacture shoes, clothing and
accessories. It is regarded as the largest sportswear manufacturer in Europe and the
second largest in the world after Nike. While, PUMA is a German multinational
corporation which designs and manufactures athletic as well as casual footwear,
accessories and apparel that has its headquarter in Germany. It is regarded as the
third largest sportswear brand in the world. The company was founded in the year
1948 by Rudolf and his brother Adolf Dassler. However, the relationship among the
two brothers deteriorated until the two decided to split in 1948 and forming two
separate entities namely Adidas and PUMA. Both the companies are presently
located in Germany, Herzogenaurach.
The present report will be analysing the financial performance of both the
companies based on the data accumulated from the financial reports of 2017 and
2018 respectively. By performing a comparative analysis an understanding of the
two company’s profitability situations can be obtained in sportswear sector.
2: Industry Analysis:
The market for sports apparel was valued at $239.78 billion during 2018 and it
is projected to grow CAGR 10.4% by the year 2025. During 2018, the segment of
men and women end user amounted to greater than half of the share in total sports
apparel market and it is anticipated to grow more than half of the share in the overall
sports accessories and apparel market (Grandviewresearch 2020). The anticipated
forecasted growth stands CAGR of 4.6% all through the forecast period.

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Rise in the awareness regarding a healthy lifestyle and regarding the health benefits
of fitness activities particularly, swimming, yoga, running and aerobics are projected
to drive growth in the market. Rise in the popularity of sports events, particularly
Soccer World Cup, Olympic Games and Cricket World Cup is further boosting the
growth in the market. Increase in the case of work-related health issues, such as
stress and obesity, is pushing more number of people to follow any sport and fitness
activity. this further increases the demand for trendy and comfortable sportswear.
Furthermore, the increasing in popularity in international sportswear brands is also
contributing to the demand for the product.
Figure 1: Industry Trends
Source: (Grandviewresearch 2020)
3: Company overview:
Adidas was started by Adolf Dassler and was joined by his elder brother
Rudolf in 1924. Adidas is the largest sportswear company in Europe and second
largest company in the world. Adidas is the holding company for the Adidas Group,
which comprises of Reebok Sportswear Company, 8.33% of German football club
Bayern Munich and Runtastic which is an Austrian fitness technology company
(Adidas-Group 2020). The company reported a total revenue of €21,915 billion of
revenue in 2018.

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Figure 2: Adidas Logo
Source: (Adidas-Group 2020)
PUMA, on the other hand, is the third largest company of sportswear and
accessories in the world. The company was founded by in 1948 by Rudolf Dassler
which has its base in Herzogenaurach, Germany. PUMA employs greater than
13,000 people across the world and sells its product in greater than 120 countries
(PUMA SE 2020). PUMA has been listed as public company since 1986 and since
2013 the company has been led by a former football professional Bjorn Gulden.
Figure 3: PUMA Logo
Source: (PUMA SE 2020)