Financial Assessment and Investment Strategy for Burberry Group PLC: 2021-2022 Review

This report analyzes the financial performance of Burberry Group PLC to determine the optimal timing for investment. The report includes a detailed study of Burberry’s stock price trends over the previous and current years, identifying key variables influencing these changes. A comprehensive analysis of Burberry’s growth during 2021 and 2022 was conducted through financial ratio estimations. The report also highlights stock recommendations, potential risks, and strategies to mitigate them. The conclusion provides recommendations aimed at enhancing Burberry’s financial standing.

SKILLS APPLIED: Financial and Ratio analysis, Investment Strategy and recommendations, risk assessment and mitigation planning, quantitative data analysis, strategic financial planning.

Duration: April 2023- June-2023

Project Type: Individual

Challenges Faced:

1. Volatility in stock prices during the recovery period:
   Burberry’s stock prices fluctuated significantly throughout 2021-2022 due to external factors such as the pandemic, changes in executive leadership, and global events like the Russia-Ukraine conflict.
2. Unpredictable market conditions and profitability trends:
   The post-pandemic environment presented challenges in analyzing profitability trends, with significant shifts in consumer behavior and regional performance disparities impacting Burberry’s financial ratios.
3. Assessing financial ratios with incomplete data due to market disruptions:
   Some financial data was affected by disruptions in key markets, especially in Asia, complicating the calculation of accurate liquidity and efficiency ratios.

How I Overcame Them:

1. Comprehensive financial analysis with trend identification:
   I conducted a thorough review of Burberry’s stock price performance and key financial ratios, comparing them over the two years. By identifying patterns of volatility and adjusting for external factors, I was able to provide a clearer picture of the company’s financial trajectory.
2. Applied multiple financial ratios to ensure reliability:
   To address profitability and liquidity fluctuations, I utilized a wide range of financial ratios, such as Gross Profit Margin, Net Profit Margin, Current Ratio, and Quick Ratio. These indicators helped highlight Burberry’s strengths and weaknesses, particularly in terms of liquidity and profitability despite market uncertainties.
3. Incorporated risk management strategies into investment recommendations:
   To mitigate the risks posed by market disruptions, I included risk-adjusted investment strategies in the recommendations. These strategies accounted for potential economic downturns and regional instability while emphasizing long-term growth potential.

RESULT

The financial assessment successfully provided a comprehensive view of Burberry’s financial health during 2021-2022, despite market volatility and external challenges. The investment strategy recommendations were grounded in a thorough analysis of financial ratios and market conditions, offering insights into optimal investment timing and risk mitigation. While the project was academic, the depth of analysis and strategic recommendations were well-received and showcased a strong understanding of real-world financial decision-making. The report highlighted Burberry’s ability to weather market disruptions and proposed actionable strategies for improving its financial position moving forward.