H&M: The Challenges of Global Expansion case study
Name:
Professor:
University attached:

If the investor wants to compare the financial results of Gap,H&M, & Inditex. What
difference does it makes in the financial statements as prepared by according to different
GAAP? What is the biggest difference between US GAAP and IFRS ?
Inditex was recorded on the Madrid stock trade market toward the start of 2001 where 26
percent of the shares were sold to institutional and private offer holders. Today it is recorded at
all four stock exchanges in Spain: Madrid, Valencia, Barcelona, and Bilbao. It has been recorded
at IBEX 35 and Euro stocks subsequent to September 2001.
Inditex transformed its reviewing standards from Spanish GAAP to IFRS in 2004, which makes
min or entanglements as to redesigning money related explanations. In the Inditex yearly report
2005, the two bookkeeping techniques are shown for year 2004 and the outcome demonstrates
that by utilizing IFRS as opposed to GAAP, the income is around 0.2 percent lower.
Net working capital measures organization ́ s productivity and transient money related
wellbeing and is ascertained as present resources less current liabilities. On Inditex ́ s monetary
record, the working resources are inventories, receivables, pay charge receivables, and other
current resources. These benefits are working resources on the grounds that they relate
straightforwardly to resources that make esteem for the organization. Working current liabilities
are exchange and different payables and salary charge payable, which are liabilities from
suppliers and government.
Inditex possesses the vast majority of its inventory network offices singularly or
through co -possession, which builds its PP&E proportion. Further, Inditex at first bought its
store areas yet since Mid-nineties; it started to rent areas rather when buy was important to
acquire alluring areas, though H&M leases allstore areas. Henceforth, responsibility for and

responsibility for stores in Spain builds Inditex ́ s PP&E to deals degree. Another fascinating
perception is Inditex and GAP ́ s high intangibles to deals degree contrasted with H&M's. It is
hard to clarify the gigantic contrasts in intangibles to deals. The most obvious method of
reasoning is that organizations are producing comparative deals however Inditex is working with
more than twice the same number of stores than H&M,which obviously expands renting costs.
Moreover, Inditex deliberately seeks after most lucrative and extravagant areas, which
builds renting costs further. Inditex ́ s net working funding to deals affirms prior result.. H&M
shows the best gainfulness edges at all levels and, at first sight, is by all accounts strongest
among the three. Then again, when deteriorating gainfulness edges recognized that the
distinction in benefit edges in the middle of Inditex and H&M is brought on by diverse extension
systems and business structure.
H&M has a more preservationist development technique and stresses on making
benefit, while Inditex seeks after a forceful extension method and canalizes a bigger measure of
its benefit into new speculations. Thus, Inditex has a lower NOPLAT edge and contributed
capital turnover, notwithstanding having higher development in net deals than H&M. The
organizations have comparative net deals however Inditex has just about four times higher
capital contributed.
Hole has been exhibiting exceptionally poor benefit edge lately and its EBITDA edge
was beneath the companion bunch. Despite the fact that GAP has been eliminating its
operational exercises, which is exhibited with diminishing in put capital without a decrease in
number of stores, it is basically experiencing a decrease in deals.

US GAAP IFRS
Used in United States Over 110 countries, including
those in the European Union
Purpose of the framework US GAAP (or FASB)
framework has no provision
that expressly requires
management to consider the
framework in the absence of a
standard or interpretation for
an issue.
Under IFRS, company
management is expressly
required to consider the
framework if there is no
standard or interpretation for
an issue.
Underlying assumptions The "going concern"
assumption is not well-
developed in the US GAAP
framework
IFRS gives prominence to
underlying assumptions such
as accrual and going concern
Qualitative characteristics Relevance, reliability,
comparability and
understandability. GAAP
establishes a hierarchy of
these characteristics.
Relevance and reliability are
primary qualities.
Comparability is secondary.
Relevance, reliability,
comparability and
understandability. The IASB
framework (IFRS) states that
its decision cannot be based
upon specific circumstances of
individual users.

H&M: The Challenges of Global Expansion Case Study

Study Now!

Document Details

Related Documents

Emerging Economies and Globalization

Economic Policy Recommendation

Assignment 2: Market Forms

United States Fiscal Policy

Emerging Economies and Globalization

Principles of Managerial Economics

The Economy, Global Finance, and Inequality

Quantitative Analysis � International and Public Affairs

Should the U.S. convert to a Zero Personal Income Tax

Economic Principles and Theories: A Comprehensive Assessment

Company

Explore

Study Tools