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Essay Available:
Pages:
6 pages/β‰ˆ1650 words
Sources:
4 Sources
Style:
APA
Subject:
Accounting, Finance, SPSS
Type:
Research Paper
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 37.91
Topic:

Lush Retail Limited - Fresh Handmade Cosmetics

Research Paper Instructions:

For this assignment you will select a medium-sized private company and one that allows access to its financial statements. You will create investment strategies for this company based on a financial analysis of investment strategies applied in other companies and determine whether the company should stay private or go public. The decision will be based on how the company compares to other companies in the same industry. You will research industry best practices and selected ratios relevant to the organization. This research will inform the decision to remain private or go public and allow you to develop an argument based on your recommendation. Your argument will be based on information from the company's financial statements compared to both industry averages and to at least one benchmark company. Before developing your recommendation and an argument for a determination, review the guidelines and regulations associated with going public by reading Information for Small Businesses.
Instructions
Write a 6-page paper in which you:
Describe a selected medium-sized private company, its operations, and its associated industry and evaluate these areas to determine whether the company should be publicly traded or not.
You need access to the financial statements of the selected company to complete this assessment.
Analyze four leading financial ratios and how each would affect investment strategies and a decision for a medium-sized private company to go public or stay private.
Evaluate the application of each of the four financial ratios to a selected medium-sized private company based on comparable or benchmark industry ratios.
Recommend the application of one of the four financial ratios to a selected medium-sized private company to inform a decision to go public or stay private supported with a justification for the recommendation.
Provide at least four reliable, relevant, peer-reviewed references, published within the last five years that support the paper’s claims.
Write with accurate grammar, mechanics, and spelling in accordance with Strayer Writing Standards (SWS) style.
This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.

Research Paper Sample Content Preview:
Lush Retail Limited - Fresh Handmade Cosmetics
Introduction
In the year 2017, Forbes listed Lush Retail Limited as the number one privately owned mid-sized company in America. Thirty thousand individuals were interviewed across America. Lush Retail Limited specializes in beauty and cosmetic products. Forbes categorized mid-size companies as ones that have between 1,000 and 5,000 employees (Lush Retailer Limited, 2022). Lush Retail Limited’s inventory includes handmade hair, body, bath, and skin care cosmetics. The company has 200 retail outlets in the United States of America and 931 stalls and mall shops in 49 countries worldwide (Lush Retailer Limited, 2022). Lush Retail Limited was founded in 1995 and is headquartered in Dorset, United Kingdom. The founders were Mark Constantine, Paul Greeves, Liz Weir, Rowena Bird, Mo Constantine, and Helen Ambrose. Lush Retail Limited should go public to allow for more significant expansion and overcome reliance on the United States chain stores. Moreover, the company has a consistent revenue flow justifying a customer's need for their products.
The cosmetics industry is a very competitive arena, including prominent players such as L’Oreal, Avon products, Sephora, and Bath and Body Works. Notably, all of the above big players are publicly traded; L’Oreal (OR) trading at $351, Avon (AVP) at $4.2, and Bath and Body Works (BBWI) at $31. Sephora is owned by Moet Hennessy Vuitton (LVMH), currently trading at $126. Despite Lush Limited being mid-sized and younger, the company has employed Porter’s generic strategy that emphasizes cost leadership, differentiation, and focus (Lush Retailer Limited, 2022). Lush creates unique handmade products, making it a more significant part of its success. Creation utilizing vegan recipes has been essential to its separation system. Herbal products are more worth compared to animal items. This is a component that has prompted many individuals to incline toward the Lush Limited products.
Financial Analysis
Working Capital Ratio
It is essential to identify the company's working capital ratio to decide on whether Lush Retail Limited should go public or remain private. Since 2018, Lush Retail Limited has maintained current assets of £115 million with total assets that include goodwill and property, plant, and equipment of £288.5 million. Current liabilities stand at £113.6 million (Craft Inc., 2022). The working capital ratio is 1.012, considering the working capital ratio formula of current assets/current liabilities (£115 million/£113.6 million) (Craft Inc., 2022). L’Oreal has a higher working capital ratio of 1.28 (Macrotrends LLC, 2022). While Lush Limited company is on the green with a 0.012 advantage, it is clear that an unexpected event such as another pandemic or an economic crisis can lead the company into trouble. Notably, the company may struggle to pay off its immediate expenses and running costs. The preferred working capital ratio would be more than 1.5 to allow for a better cushion. This can be achieved by going public, which will increase the current assets of the company, further allowing comfortable expansion.
Debt-to-Equity Ratio
The debt-to-equity ratio is key in establishing...
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