Financial Analysis for Avon Products

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Financial Management Spring 2010 Project: Financial Analysis for Avon Products Inc Student: Ninoska Trejos April 17, 2010 1. Background 1.1 Company Description Avon Products Inc (AVP), founded by David H. McConnell, is a leading global beauty company, with $10 billion in annual revenue; it commenced operations in 1886 and incorporated in the State of New York on January 27, 1916. The company’s stocks are traded in the New York Stock Exchange (NYSE). Its products fall into three product categories: Beauty, Fashion and Home. Beauty consists of color cosmetics, fragrances, skin care and personal care. Fashion consists of fashion jewelry, watches, apparel, footwear and accessories. Avon conducts its business in the…show more content…
* Third-party suppliers provide, among other things, the raw materials used to manufacture Avon products, and the loss of these suppliers or a disruption or interruption in the supply chain may adversely affect its business. * Government reviews, inquiries, investigations, and actions could harm Avon’s business or reputation. * If the company were unable to protect its intellectual property rights, specifically patents and trademarks, its ability to compete could be negatively impacted1. 1.3 Executive Compensation Plan In regards to Avon’s executive compensation plan, the guiding principle of its program is “pay-for-performance,” such that the largest portion of executive compensation is at risk, meaning that it is tied to company, business unit and individual performance. The company’s compensation programs are designed to enable and reinforce its overall business strategy by aligning pay with the achievement of short- and long-term financial and strategic objectives and building shareholder value. In support of this principle, they strive to balance short- and long-term objectives by measuring both annual and multi-year performance. In addition, Avon seeks to attract, retain, motivate and reward key executive talent responsible for its short- and long-term success. They

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