This report analyzes deviations between Lvmh Moet Hennessy Louis Vuitton, SE and international industrial benchmarks. The following chapters report a common-size statement or vertical analysis of Lvmh Moet Hennessy Louis Vuitton, SE vis-à-vis global benchmarks. In contrast to this report, most vertical analyses focus on benchmarking against domestic ratios, often published by government agencies or commercial sources (e. g. Value Line, Dun and Bradstreet, and Standard & Poor’s). This type of analysis is commonly conducted by creditors, prospective investors, chief financial officers, lenders, and a corporation’s strategic management team. For those unfamiliar with this type of analysis, frequently taught in graduate schools of business, the reader is recommended Jae K. Shim and Joel G. Siegel’s recent book titled Financial Management. In their discussion of financial statement analysis and ratios, Skim and Siegel (p. 42-43), describe common-size statement (vertical analysis) as follows:

A common-size statement is one that shows each item in percentage terms. Preparation of common - size statements is known as vertical analysis, in which a material financial statement item is used as a base value and all other accounts on the financial statement are compared to it. In the balance sheet, for example, total assets equal 100 percent, and each individual asset is stated as a percentage of total assets. Similarly, total liabilities and stockholders’ equity are assigned a value of 100 percent and each liability or equity account is then stated as a percentage of total liabilities and stockholders’ equity, respectively. ... For the income statement, a value of 100 percent is assigned to net sales, and all other revenues and expense accounts are related to it. It is possible to see at a glance how each dollar of sales is distributed among various costs, expenses, and profits.

The authors suggest that vertical analyses involve industry - based comparisons. Such a comparison "allows you to answer the question, ‘How does a business fare in the industry ?’ You must compare the company’s ratios to... industry norms." (p. 43 - 44)

In this report, I calculate an industry norm by looking at firms at the global level, as opposed to a local level. In what follows, I will describe the seven - stage methodology used in performing this analysis. Each stage should be seen as a working assumption behind the numbers presented in later chapters.

With the globalization of markets, greater foreign competition, and the reduction of entry barriers, it becomes all the more important to benchmark a company’s financial indicators against other firms on a worldwide basis. This report reflects to two inescapable trends: (1) a return to fundamentals, and (2) globalization. World stock markets have recently witnessed a return to fundamental financial analysis. Sound management as opposed to "hype" will in the long run generate shareholder value. This philosophy has lead to a greater emphasis on financial fundamentals and benchmarking. Not benchmarking in a traditional sense, but benchmarking at the global level as markets become all the more international and firms create transnational and global strategies. How does a firm's asset structure vary compared to global benchmarks? Does it hold more cash and other short term assets, or does it concentrate its assets in physical plant and equipment? On the liability side, does a company have a higher percent of payables compared to the benchmarks, or does it hold a higher concentration of long-term debt? The structure of the income statement is more telling. Does the firm have a relatively higher costs of goods sold, operating costs, or income taxes compared to its global benchmarks? Are their returns on equity higher? Are profit margins greater? Are inventories held longer?

While these are the classic questions raised in most graduate MBA courses on managerial finance, in a globalizing economy the method to answer these questions may not be simple. If we consider that an industry spans multiple countries, continents and currencies, how can one perform benchmarking? This report does so by going beyond traditional analyses by considering companies competing in the same or similar industrial classification at a global level. Doing so, however, is not an obvious task. First, one needs to find firms competing in the same sector, but not necessarily competing directly with the company in local markets. These firms should not be perceived, therefore, to be direct competitors to the company in question, but simply those that have been classified by various sources(e. g. EDGAR or similar foreign filings), as competing to serve customers in the same link of the value chain, or broad industrial classification, as identified by SIC, NAICS or similar codes. Second, given the international nature of the task, one needs to control for exchange rate volatility. Finally, one needs use reasonably comparable financial line items or standards.

The goal of this report is to save the reader time. It is designed to assist consultants, financial managers, strategic planners, and corporate officers in gauging indicators of a company’s financial structure compared to firms competing or participating in the same economic sector, at the global level. Lvmh Moet Hennessy Louis Vuitton, SE, is it financially competitive? There is no absolute answer to this question. This report is not about whether a particular company or industry has performed well or poorly in the past or will do so in the future. Such conclusions are left to the reader. Lvmh Moet Hennessy Louis Vuitton, SE neither sponsored nor endorsed the analysis that follows.

Professor Philip M. Parker, PhD (Wharton) is the INSEAD Chaired Professor of Management Science and teaches INSEAD’s MBA, executive, and PhD courses on artificial intelligence and machine learning. He has also taught as a visiting Professor at MIT, Harvard University, Stanford University, UCSD, and UCLA. He pioneered the use of algorithms to generate original content, across a variety of formats, and received a patent for his approach in 2007. His work has been presented at numerous public forums (G8, White House, Davos, TEDx, etc.) and covered extensively in the press (Huffington Post, New York Times, Singularity Hub, etc.). Parker has worked with numerous multinational companies and consulting firms to develop implementation-oriented programs and projects, including McKinsey & Company, PWC, SAP, Google, Jardine Matheson, Tata Group, Citibank, Ericsson, ABB, Thomson Corporation, and a number of large financial and technology firms, to name a few.

Though we heavily rely on historical performance, the figures reported in this report are not historical but are forecasts and projections for the coming fiscal year. The forecasts are updated quarterly. This particular report was updated in the last quarter. In order to maintain comparability over time and across companies and countries, we use an index system. In the case of a firm's assets, we treat the total assets as equaling 100, irrespective of the value of the local currency. All other assets are then calculated as a percent from total assets. In this way, the structure of the firm's assets can be easily interpreted and compared with international benchmarks. For liabilities, total liabilities and equity are indexed to equal to 100. For the income statement, total revenue is indexed to equal 100, and all other figures are calculated as a percent of these figures. Ratios are projected using raw financial statistics and, as ratios, are therefore comparable. The source(s) for the various raw statistics include public filings, corporate releases, and various other data sources.

Given a company's financial structure, the resulting figures are benchmarked across "leading competitors". In choosing the leading competitors, Icon Group chooses only those firms with sound financial situations or those not undergoing radical restructuring, or where random volatility, mergers, or bankruptcy affects financial performance.

Since the calculation of competitors' benchmarks proceeds in a similar fashion, but are aggregated across all competitors, one can directly conduct a financial gap analysis. Here, Icon Group graphically reports, for each part of the financial statement, the larger gaps that the firm has vis-à-vis the leading competitors. A gap need not be a bad sign. Rather, it is simply a substantial difference that might merit further attention or signal a firm's relative strength or weakness for the coming fiscal year. Again, all figures are projections, so due caution is required

• 1INTRODUCTION & METHODOLOGY
• 2 ASSET STRUCTURE – VERTICAL ANALYSIS
• 2. 1 Overview
• 2. 2 Assets – Definitions of Terms
• 2. 3 Asset Structure: Benchmarks
• 2. 4 Large Deviations to Benchmarks: Assets
• 2. 5 Key Percentiles and Rankings
• 3 LIABILITY STRUCTURE – VERTICAL ANALYSIS
• 3. 1 Overview
• 3. 2 Liabilities and Equity – Definitions of Terms
• 3. 3 Liability Structure: Benchmarks
• 3. 4 Large Deviations to Benchmarks: Liabilities
• 3. 5 Key Percentiles and Rankings
• 4 INCOME STRUCTURE – VERTICAL ANALYSIS
• 4. 1 Overview
• 4. 2 Income Statements – Definitions of Terms
• 4. 3 Income Structure: Benchmarks
• 4. 4 Large Deviations to Benchmarks: Income
• 4. 5 Key Percentiles and Rankings
• 5 RATIO BENCHMARKS
• 5. 1 Overview
• 5. 2 Ratios – Definitions of Terms
• 5. 3 Ratio Structure: Benchmarks
• 5. 4 Large Deviations to Benchmarks: Ratios
• 5. 5 Key Percentiles and Rankings
• 6 DISCLAIMERS, WARRANTIES, AND USER AGREEMENT PROVISIONS
• 6. 1 Disclaimers & Safe Harbor
• 6. 2 ICON Group User Agreement Provisions
• 6. 3 Financial Glossaries: Bibliography