IntroductionWith the increasingly rapid competition in the fashion industry, the investment project brings broader effects on the future development of a company (Spencer, n.d.). The purpose of the report is to analyze Ted Baker Plc (Ted), a company in the fashion industry, and provide Mr. DG Farmer with investment recommendations. To achieve this, initially an overview of the fashion industry and Ted Baker Plc will be provided. Next, the report will evaluate the company's financial performance in terms of ratios. Conclusions and suggestions will then be provided. Finally, the limitations of this report and the bibliography will be presented. Fashion Industry The fashion industry includes companies that design and sell clothing, shoes, and accessories (Spencer, n.d.). Traditionally, retailers work as middlemen to purchase large quantities of goods from wholesalers and then sell them to customers. Currently many fashion companies undertake both types of operations (ibid). Many characteristics differentiate the fashion industry from others. One could be high-speed manufacturing (Fletcher, 2012). Due to seasonal changes in the industry, the demand for appropriate clothing is urgent (ibid). This has forced manufacturers to improve the efficiency of the production process. Hence, the fashion industry can be fragmented and highly competitive (ibid). There are not only major players in the market, but also many private companies and “niche shops” that produce only specific types of goods or services that consumers are targeting (ibid). Thus the competition intensifies. Additionally, the industry may be economically sensitive (Spencer, n.d.). If the economy is booming, people might buy more fashion products; However, during economic recession, this type of assets may...... middle of paper ......ms due to poor coverage of current liabilities and some difficulties in inventory management. It could also be risky for shareholders due to the chain reaction of decreasing ability to cover interest payments. Therefore, from a numbers perspective, we recommend that risk takers hold the shares for potential profits, but risk avoiders should probably sell them due to possible liquidity and management issues. Limitations This report rated Ted Baker plc based on ratio analysis which may be affected by the quality of the balance sheet. In the calculations, it was assumed that all sales and costs of sales were on credit and that most ratios were approximate. Furthermore, the analysis periods and benchmarks were limited. To evaluate further you need to consider the state of the industry and gain more insights into the company's operational strategies.