Carrefour Financial Performance Analysis
Financial performances Carrefour’s financial performances can be analysed and assessed by looking at the balance sheet, the Profit & Loss account and its global ratios. The first aspect that can be observed is that the Company is huge as it has a large amount of total assets - more than 62 billion dollars at the end of 2011. However, the total assets owned by Carrefour decreased over the last five years and this sudden decrease can be attributed to the change of strategy adopted by the Company, which probably tried to generate more cash by lowering the total assets and tightening their business, going from $ 71,724,602 in 2010 to $ 55,592,452 at the end of 2014. Moreover, analysing the Balance Sheet we see that liabilities are mainly made up by suppliers instead of long and short-term loans. This is a good thing because suppliers are much cheaper than loans to be paid back and therefore it is better for the Company’s financial performances. Furthermore, we can notice that current liabilities are much higher than long-term ones, which might be risky in case the
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However the interest cover was lower in the previous years and this may be due to either a low EBIT - therefore low sales or high operating costs – or too high interests, meaning that the debt to equity ratio is high or that the interest rate is too high. For Carrefour, the debt to equity ratio, which shows the company’s debt level compared to the equity, is 77.7%. it can be considered a risky situation, however it isn’t necessarily bad for Carrefour as its interest cover value is positive and the higher debt allows it to pay for new buildings and other assets in order to achieve growth. Carrefour’s cost of debt is 1.71%, which is positive because it is much lower than the ROE, indicating that shareholders are well
However the interest cover was lower in the previous years and this may be due to either a low EBIT - therefore low sales or high operating costs – or too high interests, meaning that the debt to equity ratio is high or that the interest rate is too high. For Carrefour, the debt to equity ratio, which shows the company’s debt level compared to the equity, is 77.7%. it can be considered a risky situation, however it isn’t necessarily bad for Carrefour as its interest cover value is positive and the higher debt allows it to pay for new buildings and other assets in order to achieve growth. Carrefour’s cost of debt is 1.71%, which is positive because it is much lower than the ROE, indicating that shareholders are well