Farfetch company is an international fashion and designer clothing Company that Jose Neves founded in 2007 ("F-1", 2021) . The Company began as an e-commerce luxury fashion shop but evolved into many retail shops located in various parts of the world. The current Farfetch fashion has embraced a mixed marketing approach through integrated physical retail businesses and a one-stop online shopping service. The mixed marketing approach has created a bigger market space for buyers and gives them a competitive edge. The Company has innovated a retail solution for enterprise retailers called Farfetch platform solutions which gives clients e-commerce solutions.
The Company is growing because the revenues have increased significantly over the past five years. Revenues increased by 62% between the years 2015 and 2017. Subsequently, revenues increased by over 250% between 2018 and 2020 ("Yahoo is now a part of Verizon Media", 2021) . However, the Companies net profits have been declining over the years. 2020 suffered the most losses due to the Covid-19 pandemic, which caused the closure of numerous stores. The gross, EBIT and net margins have also deteriorated simultaneously over the past five years. Farfetch's balance sheet comprises a significant portion of liquid assets in the form of cash with a cash to assets ratio of 43.8% ("Farfetch Financial Statements 2017-2021 | FTCH", 2021) . The total liabilities are overwhelmingly larger than total assets, thus yielding a negative value of shareholders' equity.
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The current ratio is at 2.5, which means that Farfetch's current assets are 2.5 times the current liabilities. Therefore, the Company can promptly pay its short-term debts with a low risk of default (Krylov, 2021) . However, the Company has a significant longtime debt that is far more than the shareholders' equity. The total debts as at 31st December 2020 were trailing at $5,266,961 compared to shareholder equity of -$1,676,090 , which translates to a negative debt to equity ratio (Yahoo finance , 2021) . This ratio signifies a situation of financial instability for the Company (Sovaniski & Mohd Ali, 2021) . The cash flow has an upward trend for the past five years. The Company can perform better if they continue to embrace more innovations to take advantage of the economic crisis caused by the pandemic.
References
The TJX Company's Financials . Finance.yahoo.com. (2021). https://finance.yahoo.com/quote/tjx/financials/
Farfetch Financial Statements 2017-2021 | FTCH. (2021). https://www.macrotrends.net/stocks/charts/FTCH/farfetch/financial-statements
F1.(20 21) https://www.sec.gov/Archives/edgar/data/1740915/000119312518252315/d532260df1.htm#rom532260_7
Krylov, S. (2021). The Content of Contemporary Analysis of Financial Statements. SSRN Electronic Journal . DOI: 10.2139/ssrn.3845542
Sovaniski, T., & Mohd Ali, B. (2021). The Financial Statements Analysis. SSRN Electronic Journal . DOI: 10.2139/ssrn.3794864
