Analysis of the Annual Report of the hypermarket Auchan

    Auchan is a French brand, which started with a first store in France 50 years ago, in 1961. It had been for a large time the almost only hypermarket in Spain, or at least one of the biggest ones. Here it is known as Alcampo and when I´ve arrived to Spain, 12 years ago, I´ve been impressed of the dimension of one of their establishments.

   We are going to see its annual report for the year 2010, which I´ve picked up from this internet site (http://asp.zone-secure.net/v2/index.jsp?id=198/2213/14111&lng=en) and whose interesting parts are detailed in the lines bellow.

   After working a little bit on the schedules above I´ve taken out the ratios that we can see and now I´m going to comment.

   As we see the working capital is negative, the liquidity ratio is below 1 and the acid test is also very low, and all this is because it is the debt that the company has to afford with the suppliers. This isn´t a problem for the company because they collect the money which is debt to it by the clients (in only 3 or 4 days) and it has to pay the suppliers in just 86 or 87 days.

   Alcampo also seems to be a very efficient company due to its assets turnover, for every 1 € invested they recover 1,57€ and the whole stock of the company has a rotation of 9 times per year (regarding to the inventory turnover ratio).

   The return on equity which the company has is at 8,76%, which is a good ratio nowadays. The company has even taken down its financial leverage in comparative to the year 2009.

   In my opinion the company is still a great competitor in the hypermarket sector and it has not yet said its last word even if other supermarkets try to robe them their clients they are doing well.

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