Business Valuation of Polo Ralph Lauren Corporation - Mark Moore ...

Lauren must remain a respected innovator of quality fashions and expand into othermarkets. The Polo Ralph Lauren brand name is part of the appeal of its products and isessential to its profitability.Bargaining Power of Buyers:Polo Ralph Lauren’s customers understand that when purchasing its products,they are buying quality merchandise and a much respected brand name at a fair cost.Sales at retail locations attract customers with less spending power, but customers aregenerally willing to pay the prices assigned to Polo’s products.Bargaining Power of Suppliers:The overwhelming volume of supplies needed for Polo Ralph Lauren’soperations makes it a hot customer for providers of materials such as fabrics andpackaging. Several possible providers of cotton and other fabrics result in competitionamong suppliers and reasonable costs for resources.Accounting AnalysisPolo Ralph Lauren is a very large company with various operations in various parts of theworld. They use several different accounting policies to combine or shorten theiraccounting information. The first one that they use is “Principal of Consolidation” whichbasically says that all intercompany balances and transactions have been eliminated.Polo also uses what is called the “Use of Estimates” which could distort the numbersgoing on the financial statements. To derive the quantitative measures which consist ofscreening ratios which are used to asses the reliability of Polo’s financial disclosures.13