ratio rose to a high of 7.68%. This continued profitability would aid Kao in its growth and expansion goals. Profits in turn will provide Kao with the required resources to develop superior products. Over the years, Kao has shown stability and sustain growth due to its effective profit management. Established Brand Name Kao Corporation has been in business since 1887, and by today Kao’s product is being marketed all around the globe. Kao’s product has managed to penetrate many markets and has gained the confidence of the consumers. Wide Product Lines Kao produces many different types of products. Kao has a very diversified product line including household detergents, skin care, and hair care and facial cleanser. Not only Kao’s product line diversified horizontally but also vertically. This means that within each product line would break down into many other products. Each product is aimed at a different segment of the market. Large Capital As of 31stMarch 1999, Kao’s capital stood at 451,776 million. This will enable Kao to undertake any new profitable ventures. Large capital will provide the resources it needs to finance all expansion and growth plans. High Liquidity Since 1995, Kao Corporation’s Acid Test Ratio has been rising to reach a high of 101.67% in 1999. This shows that Kao’s liquidity has been strengthening and currently very strong. Strong liquidity would mean that it is able to meet all short-term financial obligations and in the short run should any adverse events turn up, Kao Corporation would be in a better position to survive the ordeal. Reducing Financial Leverage The debt ratio of Kao’s Corporation stood at 39.18% at 31 March 1999. Kao has been reducing its debt ratio over the past 5 years. This move will reduce the company’s financial commitments and financial risk. Potential Internal Weaknesses Multiple levelled distribution channels As discussed earlier, Kao Corporati...
