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IKEA Financial Statement Analysis: Liquidity & DuPont ratios

Compute the quick and current liquidity ratios, the DuPont ratio, profit margin, asset utilization, and financial leverage for IKEA.

Write a paper discussing how differences in the industries (manufacturing, service, and retail sales) and different measurement conventions (IASB and FASB) affect the financial presentation of IKEA.

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Answer:
We have,
Quick Ratio:
Quick Ratio=(Current Asset-Inventories)/(Current Liabilities)
Or,
Quick Ratio (2010)=(€ 22,608-€ 3,415)/€12,811=1.50
Current Ratio:
Current Ratio=(Current Asset)/(Current Liabilities)
Or,
Current Ratio=(€ 22,608)/€12,811=1.76
DuPont Ratio:
ROE=(Net profit margin)* (Asset Turnover) * (Equity multiplier)
Here,
Net Profit Margin:
Net Profit Margin=(Net Income)/Revenue
Or,
Net Profit Margin=(€ 2,688)/€23,539=0.1142=11.42%
Asset Turnover:
Asset Turnover=Revenue/(Total Asset)
Or,
Asset Turnover=€23,539/€41,273=0.57
Equity Multiplier:
Equity Multiplier=(Total Assets)/(Shareholder^' s Equity)
Or,
Equity Multiplier=€41,273/€22,841=1.81
Hence,
ROE=11.42%*0.57*1.81=0.1178=11.78%
Asset Utilization Ratios:
Asset utilization ratios include:
Days sales inventory
Days sales receivables
Net working capital ...

Solution Summary

IKEA financial statement analysis for liquidity and DuPont ratios are examined.

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