Financial Statement Analysis Case: Revlon
The following information is from the 2019 financial statements of Revlon, the beauty products company.
Revlon
Balance Sheet Information (in millions of dollars)*
At December 31, 2019 2018 2017
Accounts Receivable 423.4 431.3 444.8
Inventories 448.4 523.2 497.9
Accounts Payable 251.8 332.1 336.9
Income Statement Information
For the Year ending 2019 2018 2017
Sales (all credit) 2,419.6 2,564.5 2,693.7
Cost of Goods Sold 1,052.2 1,117.0 1,152.3
L'Oreal
Balance Sheet Information (in millions of dollars)*
At December 31, 2019 2018
Accounts Receivable 4,086.7 3,983.2
Inventories 2,920.8 2,821.9
Accounts Payable 4,658.4 4,550.0
Income Statement Information
For the Year ending 2019 2018
Sales (all credit) 29,873.6 26,937.4
Cost of Goods Sold 8,064.7 7,331.6
Required:
Use Revlon’s and L’Oreal's financial information to answer the following questions:
a. What is Revlon’s operating cycle (in days) in 2019 and 2018? Comment on the change from year to year.
b. What is Revlon’s cash operating cycle (in days) in 2019 and 2018? Comment on the change from year to year.
c. What is L’Oreal’s operating cycle (in days) in 2019? What is L’Oreal’s cash operating cycle (in days) in 2019?
d. Use Revlon’s financial information to compare the components of Revlon’s operating cycle and cash operating cycle to L’Oréal’s for 2019.