Managerial Finance Assignment Sample

Introduction

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Louis Vuitton (LVMH), a well known luxury brand in the international market has been trying to expand its operational stores all over the world. To this it requires an amount of fund which can be arranged by various sources and the main and the last decision will be taken by the board of Directors. With the proper analysis with each and every source with the financial statements thereon the decision would be made. The important ratios are also calculated below for proper understanding and will also be helful for the investors too.

A)

The organisation i.e Louis Vuitton (LVMH) is one of the leading luxury products organisations which earn highest profit in the first quarter. The company deals in various things such as Wines and Spirits, Fashion and Leather Goods, Perfumes and Cosmetics, Watches and Jewellery. When we look at the data of the financial year 2021, 2020,2019, it can be easily said that the company is increasing its revenue percentage with the coming years. For example, in the financial year 2019 in the first 9 months the company has earned 3349 million euros and 4251million euros in the first six months of the financial year 2021 (Kapferer,2012). It has recorded 28.665 billion euros in the financial year 2021.

Now looking at the particular sectors and the revenue it earns it the different financial year. For wines and Spirits In the year 2021 the revenue went up high by 30% when compared to the first nine months of the year 2020 and by 10% in the financial year 2019.In the United States and Europe the profit percentage was more than the other countries so we can say that the company is earning good amount of profit. Yes, the revenue percentage in comparison with other luxurious brands is very high and operates worldwide with more than 5000 stores worldwide.

If we look at the segment Fashion and Leather Goods the revenue went up high by 57% in the financial year 2021 and by 39% in the financial year 2019.It has its various shows in the fashion industry with fashion shows in the Athens and Paris and Dior also. Its ready to wear part is the best part of the Segment. Fashion segment is that segment which will always demand for new ideas and the brand never falls to bide by it.

Talking about Perfumes and Cosmetics the revenue gone high by 30% in the financial year 2021 and was low in the last two financial year 2020 and 2019.The new perfumes by the company has made the remarkable performance in the recent times. Their websites also attracted a huge crowd making them earn a good amount of profit. This is that segment which is growing with each passing day and will yield a huge amount of profit if the market is in boom.

Jewellery and Watches segment also considered to be a main part of the company has seen a growth in the revenue in the financial year 2021 by 37% which was low in the last two years by 2% each year. With the acquisition with the remarkable brand Tiffany the company has seen the growth in this segment in the United States Particularly. When we look at the latest scenario the limited edition of the watches also grabbed the attention of the public and the customers as a whole. A new line of the jewellery also was the point of attraction of the customers (Nagasawa,2009).

And in the selective retail the revenue went up by 23% when we compared the other two financial years. The financial year for the company was tough as it has to close various operating commercial stores in 2019 but during this course of action the online stores proved to show the remarkable profit thereon. It has signed the partnership with the known brands and expanded its network also. So, this segment should be handled in a most proper way to maintain the profit and increase the profit also in the coming years.

Fashion and Leather Goods are the most important and crucial element when we look at the main source of income of the company. And yes, it has also been seen that the dynamic environment has direct impact on the income of the company. The company should maintain a direct focus on the luxury brand as it is the highest profit making sector maintain its durability and the quality. The various brands which have marked their excellence have proved to be a threat in the ever changing environment. The international markets in combination to online market have to be kept strong to maintain its position in the market for a long term and sustain. The main risk to this can also be addressed as the demands and the purchasing power could decrease and there could be no way round in which the company could manage the earnings in this case. For example we take this case of the pandemic, nothing could be done and the company has to close down its stores. It could also happen that the tourism sector can be slowed down as there are the chances of this pandemic again affecting the demand for the products in each and every segment of the company also. Talking about the risk which is directly related with the income could also be the increase in the expenses of operating the stores to maintain its public effect in the market. The public sustainability with the new brands coming in its way could also be one of the reasons of the downfall in the revenues. By this overall analysis it can be said by proper analyzing the risks it should keep all the positive outcomes also which would lead to growth and sustainability of the company.

B)

The company is trying to manage and optimize the cash flows and the profit which it has earned in the whole year. In the recent time it has an acquisition with the well known luxury Brand Tiffany has also gained much importance in the market. It has utilized the earnings in the most productive and efficient ways. If we talk about the cash flows of the company the company has acquired other well known brands also resulting in the profit. The wholesale percentage of the wines segment has also increased with the increase in the cash flow. With the continuous amount earned by the company it has invested in the health sector also in the financial year 2021.It has also strengthened the distribution network of the company to maintain the satisfaction of the customers ( McCutcheon,2015). Therefore the shareholders are also enjoying the dividend that has been paid to them regularly and the amount they have invested is giving good returns.

The services also include the revenue as it has invested in the health industry also. And it has also been seen that the company is taking the discount also into consideration when we talk about the cash flows of the particular tenure. If we look at the amount that can be lended instead it could use the amount in expanding its tentacles all over the world. Although the company is doing great and also trying to cover it and every segment still there is long way to go for the company also. The previous cash flows have been utilized in a way such that the brands which are well known in the market require a amount of acquisition which are also kept aside with the day to day cash flows also. In other words it can be said that the inventories are also maintained with the daily cash flows. The company has also invested in the intangible assets leading to the increases in the amount of assets also (Tan,2013). With the daily cash flows it can keep aside a particular amount which can be used later in the form of reserve.

C)

Yes, this has been correctly said that time value of money is the most important part when we look at the Lincon International Bank. It should definitely look at the importance of money in the coming time as the situations in the market are ever changing. It should invest in the better options which could give a good return in the coming years. With this the importance of value of time can be said like this way for the company too. It should grab the opportunity of ventures also as the opportunities are for short term and could be gone if not grabbed quickly. It should also look into some important parts and earnings which could be optimized perfectly with efficiency also. With the ever-changing p