Analysis Hallenstein Glasson Holdings Limited

2839 Words Jan 2nd, 2015 12 Pages
Introduction
Hallenstein Glasson Holdings Limited (HLG) is the one of the leading apparel retailers in New Zealand, listed on the New Zealand Stock Exchange. The company provides good quality products and has been a successful as well as an innovative business. This report makes an analysis of the financial information in the 2013 annual report for HLG. It looks at the quality of earnings through performance and solvency measurements. The strengths and weaknesses of the company are then summarized and the share price is estimated. This report also evaluates HLG to make a recommendation on share purchasing. Following this recommendation is shown for potential investment.

Analysis of the Financial Information
Evaluating company’s financial
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As HLG had no non-current liabilities in either 2013 or 2012, equity exceed non-current assets about $25,709,000 in 2013 (Equity – Non-Current Assets = 66,935,000 – 41,226,000), and about $27,113,000 in 2012 (Equity – Non-Current Assets = 66,564,000 - 39,451,000). There was an obvious increase in the amount of non-current assets, so the difference between equity and non-current assets is going down. The calculation shows short term financing may not be matched with long-term assets. Also the working capital ratio is 2.4:1 (Current Asset: Current Liability = 44,082,000:18,373,000) in 2013. There was little change in this ratio from 2012 to 2013. This ratio should have a proper range from 1.5:1 to 3:1. Hence, this calculation represents the inventory are held could be reasonably. The proper working capital ratio is more significantly confirmation of the more fundamental requirement that the long term financing of the business is in excess of the long term assets (Trow, 2013, p.9). Therefore, HLG has a good financial health. It has good ability to repay obligations when they become due and its shareholders wealth could be protected against future possible downturn.

3. Ratios for detection of excessive assets
Assets in excess of the minimum required can cause an inefficient business, so two major ratio calculations to check whether the holding of assets is excessive
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