Financial Performance Analysis Based on Profitability Ratio: Study at Inditex 2019-2023

Abstrak

Inditex, one of the world's biggest fashion retailers, has been on a remarkable rise, begging questions about its financial performance. The paper investigates the level of financial health of Inditex by assessing its profitability ratios for 2019–2023. More importantly, it is intended to provide an analysis of Inditex's profitability in relation to key competitors, Fast Retailing and H&M. The research will assess the aspects of financial performance of Inditex using the profitability ratio method, establish trends in profitability ratios, and discuss possible causes for such trends. The results indicate that Inditex managed to substantially maintain gross profit margins throughout the period under investigation. A comparison of Inditex with Fast Retailing and H&M shows that, in most profitability metrics, the study indicates it has generally outperformed its competitors, hence able to establish itself as one of the leaders in the fashion retail industry. The conclusions drawn indicate that Inditex has financial muscle being above its competitors. With these findings, this study recommends that Inditex continues with the strategic cost management orientation it has undertaken, further explores new markets, and invests in digital transformation to enhance its competitive edge and profitability. The continuous control of profitability ratios and benchmarking against competitors provide the basis upon which Inditex would be able to sustain its leadership position and adjust to the future challenges existing within the market. This overview summarizes the important assessment of Inditex with respect to its profitability ratios, thereby giving insights into its efficiency and competitive position within the global fashion industry, complete with an in-depth analysis and recommendations that may help Inditex in continuing its growth track record by ensuring its financial health during the next few years.