ACCT 370 Week 3 Excel Project: Part 2 Example

Ratio Analysis of Crocs, Inc. Against Steven Madden and Wolverine World Wide, 2024-2025

Method

All ratios use figures from the Part 1 sheets, taken from each company's Form 10-K (Crocs, Inc., 2026; Steven Madden, Ltd., 2026; Wolverine World Wide, Inc., 2026). Ratios that divide an income statement amount by a balance sheet amount use the average of the opening and closing balances, as Revsine et al. (2018) recommend, and days ratios use 365 days. Wolverine's fiscal 2025 had 53 weeks, which slightly raises its turnover and lowers its days figures relative to the others. For Steven Madden, trade receivables and factor accounts receivable are added together before computing days sales outstanding, since both represent amounts owed for sales.

Liquidity

Crocs has the thinnest liquidity cushion of the three, yet that is less worrying than it looks. A company that generates $710 million of operating cash a year, against current liabilities of $700 million, does not need a large stock of liquid assets to pay its bills. Steven Madden's higher ratios reflect a business that carried no long-term debt until 2025 and held more inventory and receivables relative to its payables.

Activity

Crocs collects its cash about 45 days after paying for inventory, half the time Steven Madden needs. Its large direct-to-consumer business brings in cash at the register, which keeps receivable days low, and its supplier terms let payables fund much of its inventory. Its asset turnover is the lowest because $1.7 billion of goodwill and intangibles from the HEYDUDE purchase sit on the balance sheet without producing revenue directly. Wolverine's inventory days fell from 116 in 2024 to 97 in 2025, continuing a cleanup of excess stock.

Profitability

Crocs's gross margin, about 17 points above Steven Madden's, reflects a product with few components and strong brand pricing. Its reported 2025 operating, net and return figures are dominated by the impairment. Steven Madden's operating margin fell from 9.9% in 2024 to 3.2% in 2025, the year it acquired Kurt Geiger and faced higher tariffs on imported product (Steven Madden, Ltd., 2026). Wolverine's margins improved for a second straight year as its restructuring took hold.

Solvency

Crocs's debt ratios rose in 2025 only because equity shrank through the loss and $582 million of share repurchases; its borrowings actually fell. Steven Madden, which ended 2024 with no long-term debt, borrowed to finance its acquisition, and its debt ratio rose from 38% to 53%. Wolverine remains the most indebted, with liabilities more than three times equity, though that ratio has improved from 6.4 in 2023. Coverage for the competitors uses net interest expense as each reports it, so the comparison is approximate; even so, Wolverine's 4.6 times shows less room than Crocs had before the impairment.

Return on Equity Decomposed

Nissim and Penman (2001) show that separating operating profitability from the effect of debt financing helps explain differences in returns and their persistence. Here, Wolverine's 26.6% return on equity comes mostly from an equity multiplier of 4.69, not from margins, while Crocs's 2024 return came from margins that no competitor approaches. Soliman (2008) found that the components of a DuPont analysis carry information about future profitability beyond the return figure itself, and that is the reason to report all three here.

Crocs 2025 Without the Impairment

Because the $738.1 million impairment was non-cash and not deductible for tax purposes, removing it adds the full amount back to both operating income and net income (Crocs, Inc., 2026). On that basis, 2025 operating income would be $887.6 million, an operating margin of 22.0%, and net income would be $656.9 million, a net margin of 16.3% and a return on average equity of 42.0%. Interest coverage would be 10.1 times. The adjusted figures are lower than 2024's, because HEYDUDE revenue fell 13.3% and tariffs trimmed gross margin, but they show a highly profitable core business, not a company in decline. Part 3 will test whether those trends hold across all three years.

References

Crocs, Inc. (2026). Annual report on Form 10-K for the fiscal year ended December 31, 2025. U.S. Securities and Exchange Commission. https://www.sec.gov/Archives/edgar/data/1334036/000133403626000006/crox-20251231.htm

Nissim, D., & Penman, S. H. (2001). Ratio analysis and equity valuation: From research to practice. Review of Accounting Studies, 6(1), 109-154. https://doi.org/10.1023/A:1011338221623

Revsine, L., Collins, D. W., Johnson, W. B., Mittelstaedt, H. F., & Soffer, L. C. (2018). Financial reporting and analysis (7th ed.). McGraw-Hill Education.

Soliman, M. T. (2008). The use of DuPont analysis by market participants. The Accounting Review, 83(3), 823-853. https://doi.org/10.2308/accr.2008.83.3.823

Steven Madden, Ltd. (2026). Annual report on Form 10-K for the fiscal year ended December 31, 2025. U.S. Securities and Exchange Commission. https://www.sec.gov/Archives/edgar/data/913241/000162828026012995/shoo-20251231.htm

Wolverine World Wide, Inc. (2026). Annual report on Form 10-K for the fiscal year ended January 3, 2026. U.S. Securities and Exchange Commission. https://www.sec.gov/Archives/edgar/data/110471/000162828026012614/www-20260103.htm