The monetary position of Lulucom Financial Analysis can be evaluated by taking a look at its ratio analysis.
We can see in appendix 1 how the earnings has actually been decreasing over the years after 2005. Nevertheless, the reality that the gross profit margin has actually decreased too recommends that the cost of sales have actually not gone down at the exact same rate. The declining net success, revealing a negative pattern from 2006 to 2007 recommends that expenses have increased far more than the company is able to manage provided its current resources. With a long term financial obligation adding to the interest expense, Lulucom Financial Analysis is in dire requirement of an alternative earnings stream.
We can see a significant declining trend in the existing ratio too showing a fall in liquidity which is another point of concern for Lulucom Financial Analysis specifically as it has a long term financial obligation to settle too. With the present properties not in a position to pay off the present liabilities, we can see how the company would be in a major financial problem unless the capital enhances with additional sources of finance.
We could explore the monetary condition of Lulucom Financial Analysis further by looking at the company's overall financial obligation to total assets ratio in appendix 2. We can see how the overall assets of the business have been declining from 2005 onwards. However, the long term debt has remained at $160 million while the short-term debt has increased side by side. Such a situation has actually brought Lulucom Financial Analysis to a point where its overall financial obligation to total possessions ratio has increased. A rising total financial obligation to total properties ratio recommends that the danger has actually increased in terms of the business's possessions not sufficing to cover its overall liabilities. This might not be revealing the overall liquidity position but provides clearness in regards to the general monetary position of the company.