The following explanations refer to the impact of the first-time application of the new accounting standard IFRS 16 Leases as of January 1, 2019. As a result of the new standard all leases must be accounted for in the form of a right-of-use asset on the asset side of the balance sheet and a related current or non-current lease liability on the liabilities side of the balance sheet. As part of the transition to the new accounting for leases, PUMA elected to use the partial exemption provision and has not performed a retrospective adjustment of the previous year’s figures. In the balance sheet above, the rights-of-use relating to assets and the lease liabilities were added as additional balance sheet items. The previous year's figures remained unchanged. In order to ensure full comparability with the reported previous year's figures, the impacts of the first-time application of IFRS 16 on PUMA Group’s net assets in the financial year 2019 will be presented and explained below.

The recognition in the balance sheet of the right-of-use assets in the amount of € 719.0 million and the related current lease liabilities (€ 144.8 million) and non-current lease liabilities (€ 600.5 million) resulted in a significant increase of the balance sheet total as of the balance sheet date on December 31, 2019. The right-of-use assets refer to own retail stores totaling € 419.6 million, warehouses and distribution centers totaling € 175.7 million and other lease items, mainly technical equipment and machines and motor vehicles totaling € 123.7 million as of December 31, 2019.

The significantly increased balance sheet total specifically resulted in a decrease of the equity ratio. The equity ratio, calculated as a quotient of equity and balance sheet total, decreased from 53.7% in the previous year to 43.9% as of December 31, 2019. In absolute numbers, the equity of the PUMA Group, however, increased by 11.5% from € 1,722.2 million to € 1,920.3 million. If the lease liabilities recognized in the balanced sheet were disregarded for comparison purposes, the equity ratio as of December 31, 2019 would be almost unchanged at 52.9%.

The new leasing standard analogously caused a significant increase of the debt ratio, calculated as the quotient of debt capital to equity. The ratio of debt to equity was at 86% at the end of 2018. Due to the recognition of the lease liabilities on the balance sheet, the debt ratio has now increased to 128% as of December 31, 2019. If, for comparison purposes, the lease liabilities recognized on the balance sheet were disregarded, this would result in an almost unchanged debt ratio of 89.2% as of December 31, 2019.

Please refer to the Notes to the Consolidated Financial Statements, chapter 1 General for a detailed description of the new accounting standards and the effects of the first-time application of IFRS 16 Leases.

PUMA continues to have an extremely solid capital base. As of the balance sheet date, the shareholders' equity of the PUMA Group increased by 11.5% from € 1,722.2 million in the previous year to € 1,920.3 million as of December 31, 2019. Due to the previously explained impact of the first-time application of IFRS 16 Leases, the balance sheet total rose by 36.5% from € 3,207.2 million in the previous year to € 4,378.2 million. This resulted in a calculated decrease of the equity ratio from 53.7% in the previous year to 43.9% as of December 31, 2019.

G.17 Total Assets / Equity Ratio

Despite the significant increase in net sales and the increased number of our own retail stores, working capital rose only by 9.0% in the past financial year from € 503.9 million to € 549.4 million. As a percentage of total sales of the respective financial year, this corresponds to a decrease of the working capital ratio from 10.8% in the previous year to 10.0% as of year-end 2019.

Inventories increased by 21.3% from € 915.1 million to € 1,110.2 million as of the balance sheet date. This increase is related to early purchase of products to balance supplier capacities and to secure product availability for our customers. In addition, a higher number of own retail stores and the expected increase in sales resulted in higher inventory. Trade receivables increased by 10.5% from € 553.7 million to € 611.7 million due to the active receivables management. Other current assets included in working capital increased slightly by 4.4% from € 187.7 million to € 196.0 million.

On the liabilities side, trade payables increased by 19.6% from € 705.3 million to € 843.7 million. Other current liabilities included in working capital increased by 17.3% from € 447.3 million to € 524.9 million. The increase in other current liabilities was primarily the result of higher customer bonus and warranty provisions due to the strong sales growth.

G.18 Working Capital