RadioShack’s financial stability has been a much discussed topic in the electronic retail store industry. It has only recently realized that its old formula has not translated well into the current market. Part of its plan to become an active competitive member in their industry relies on several factors within the company that can be analyzed, changed, and fixed using a financial analysis. The financial ratios will let them identify their problem areas in comparison to their industry competitors. The Return on Capital Employed (ROCE) ratio is a profitability ratio that measures how well profits are being generated based on capital employed. RadioShack’s ROCE dropped down to -34% in 2013 in comparison to 10% in 2012. For every dollar of capital employed, RadioShack is losing $0.34. The dramatic dip stems from 2012’s positive earnings before interest and taxes (EBIT) of 155.1 million dollars to 2013’s EBIT of -344 million dollars. Capital employed is determined by subtracting current liabilities from total assets. In 2013, capital employed decreased by 79 million dollars. ROCE is used to view the long-term profitability of firms. A more in-depth trend analysis done over several years would need to be done to determine the …show more content…
The ratio should be stable as to denote how well the firm is controlling their gross margin. In 2013, RadioShack’s cost of goods sold to sales ratio was 66%, increasing from 2012’s 58%. The change was only 7%, but is something the company should keep track of for 2014. The depreciation to sales ratio helps firms examine the extent of non-cash expenses in relation to their sales. The target rate for this ratio should be around 1%. In both 2012 and 2013, RadioShack’s depreciation to sales ratio slight increase by a fraction of a percentage. Still, their ratio was higher than the target rate of 1% and closer to
This formal report will show the history of Staples and Circuit City. Why did Staples is still in business as of today and why is Circuit City out of business? What were the business model or strategy used by Staples, and the strategy used by Circuit City? This report will analyze the history, business strategy, and financial history of the companies. The case also highlights the importance of sound strategic business decisions, target marketing, and customer input. Moreover, the case points to the need for a retailer in such a competitive marketplace, with both brick and online competitors, to find its competitive advantage and adhere to it.
Corporations keep various types of financial records and it is the responsibility of managers to make sure that the records are maintained and resolved at the end of the fiscal year. Most company has shareholders that want a year-end account on how the company has done and with a projection of what the company is capable of doing in the future. The shareholders have a vested interest and want to be kept informed on how the company is doing financially. Financial records for major corporations are public knowledge and this paper is comparing Target and Wal-Mart and their financial standings.
The purpose of this report is to research and examine Toys "R" Us, the world's largiest toy chain store, so as to provide the company with strategic recommendations for future success. To throughly understand the company, the analysis is divided into multiple focus points: industry analysis, firm strategy analysis and firm financial analysis. The analysis concludes with rating that we give the company's stock as well as our strategic recommendations for the company to increase it's overall preformance.
Best Buy, a 47 year old business, has faced countless challenges over the years. While Best Buy’s reputation has fluctuated, the company has presented several strategies to deal with these problems by creating plans to stabilize and promote growth. Through an in-depth analysis, the following areas were studied performance, environment, and organization. The analysis will assist in examining Best Buy’s strategies and core competences. The objective of this study is an understanding of the challenges and to figure out what makes the organization successful.
Return on capital employed (ROCE) expresses a company’s profit and displayed as a percentage of the amount of capital invested in the company. ROCE interprets “capital employed” as the total amount of money invested in the company in the long term, regardless of whether that money has been supplied by shareholders or lenders. This amount will compared with the return achieved on that capital. The results were shown that Wm Morrison Supermarkets are higher than Tesco by 4.55 per cent.
Ratios for return on assets and return on equity offer support for the loss in stockholders’ equity. Return on assets went from 13.1 in 2000 to 5.1 in 2001 and return on equity dropped from 25.4 in 2000 to 8.7 in 2001. Return on equity represents return on assets divided by the difference of 1 and debts/assets.
The Dupont analysis includes the asset turnover ratio, the profit margin percantage, return on shareholder’s equity percentage, return on assets, and the equity multiplier (Spiceland, Sepe, and Nelson 258-264). The asset turnover ratio is the amount of revenue received for every one dollar of assets, it reveals how efficiently the company is distributing assets. Apple’s asset turnover ratio is 60.43 which means for every one dollar Apple has in assets, they receive approximately sixty cents (Apple Inc). Microsoft’s asset turnover ratio is 13.17 so for every dollar they only receive about thirteen cents (Microsoft Inc). Apple is doing significantly better in this category. The profit margin is just how much of a company’s sales they keep as a profit. Apple’s profit margin is 21.67% while Microsoft has a 28% profit margin so Microsoft is accumulating more profit off each sale but their sales are lower. The return on shar...
We will find out the competitors and the number one thing that Sonic provides to shows its uniqueness. This paper will also analyze the four common financial statements, that has been used to determine the company financial ratios. Lastly, some recommendations on what Sonic can to keep them successful. Staying successful within the company; indicates making changes and recommendations to improve Sonic financials.
Introduction The purpose of this report is to undertake financial analysis of the position of the three major supermarket chains (Tesco plc, Morrison plc and Sainsbury plc) in the UK, using the financial tools such as Horizontal and Vertical Analysis and Ratio Analysis. The calculations done are considering the figures from the income statement and balance sheet of these three companies for the last 2 years (2008 & 2007). Doing these calculations is an effort to find out the current position and if any forecast on their performance. Tesco Plc *Interpreting the Horizontal and Vertical *Analysis The balance sheet’s horizontal analysis reveals the first worrying statistics about the company- the fact that stock level has increased by 25.84% in the year, even though net assets have increased by only 12.59%. The vertical analysis of the balance sheet again highlights the increase in amount of stock held by the company at the end of 2008 and increase in current assets. Interpreting the Ratio Analysis By looking at the ROCE* ratio it is clear that the business has not generated any higher return in the period 2007-2008. Though there is a marginal decrease in the returns (0.14% from 0.16%), however when compared with returns of other competitors Tesco plc has performed much better. Drop in asset utilisation ratio in the year 2008 indicates that the company did not use its assets efficiently to generate sales. As a result profit margin dropped down to 5.91% in 2008 from 6.21% in the year 2007. The Acid test ratio also doesn’t meet the ‘ideal’ ratio of 1:1. In other words Tesco had only 38p of quickly realisable assets to meet each £1 of current liabilities. Stock turn shows the effect of increased stock at the end of 2008 as it s...
By the 1980s, just before the rise of Wal-Mart, Kmart had become complacent. It believed it would be the king of discount retailing, now and forever. It didn't perform an accurate SWOT analysis, but to be fair, who could have seen the rise of Wal-Mart to the position of the world's number-one retailer? Still, as Wal-Mart built new stores in town after town, supported by cutthroat pricing and solid logistics, Kmart's complacency would cost them. Part of the problem was that as Wal-Mart was pouring money into information technology (IT), Kmart's IT budget continued to shrink – not just once, but several years in a row. While Wal-Mart's logistics and supply chain management got sharper, Kmart's stagnated. And while Wal-Mart was able to squeeze more value out of its stores and its systems, Kmart lost ground. By the time Kmart had finally decided to start devoting more resources to IT, it was so far behind Wal-Mart that catching up would have been a near-impossible task without the recession in the early part of this decade. With the effects of the recession taken into account, Kmart instead was consigned to also-ran status among discount retailers.
Evaluating a company’s financial condition can be done by looking at its profitability or its ability to satisfy long-term commitments. These measures can be viewed through an analysis of a company’s financial statements, including the balance sheet and income statement. This paper will look at the status of Scholastic Company’s (Scholastic) ability to satisfy its long-term commitments and at the profitability of Daktronics, Inc. (Daktronics). This paper will include various financial ratio calculations and an analysis of the notable trends. It will also discuss the profitability and long-term borrowing positions of the firms discussed.
Ratios traditionally measure the most important factors such as liquidity, solvency and profitability, as well as other measures of solvency. Different studies have found various ratios to be the most efficient indicators of solvency. Studies of ratio analysis began in the 1930’s, with several studies of the concluding that firms with the potential to file bankruptcy all exhibited different ratios than those companies that were financially sound. Among the study’s findings were that the deciding factor of the predictor of bankruptcy should not be only a few ratios, as the measure of a company’s financial solvency may differ as the firm’s situations differ. The important question is to which ratios are to be used and of those ratios chosen, which ratios are given priority weight.
Equity investors will look at the ROCE in order to determine if a firm is effectively deploying its capital. Having a ROCE that is in-line with its competitors will aid Barra Airways in achieving a good price for its equity, should it choose to use equity as a source of finance.
Best Buy opened it’s doors in 1966 by the name of “Sound of Music”, it wasn’t until 1986 that it proceeded to change it’s name to what it is recognized today. Best Buy is the top retailer in the nation’s (USA) consumer electronic retail industry. What makes Best Buy unique is that they sell electronics and appliances used for home and office, they provide customer service and business support through their Geek Squad Technical Support System, and they offer major tech brands and their products such as Apple and Windows in house. According to The New York Times, the computer and electronics industry consists of companies engaged in the retailing of computers and peripherals, consumer electronics and other technology products. The industry includes household appliances, audio and video equipment, consumer software, digital cameras, cell phones and components and other electronic goods.” Like many top leaders, Best Buy has not been immune to issues in regards to maintaining its status in the market. Some of the issues the company faces include, loss in stock value, loosing the retention of it’s customers, and being out-competed by e-commerce companies in the same industry such as, Amazon. All of this can be classified as a marketing problem Best Buy faces.
The analysis of these ratios shows how Ford stands as a company for the past five years. Return on equity (ROE) reveals how much profit a company earned in comparison to the total amount of shareholder equity on the balance sheet. For long-term investing with great rewards, companies that have high return on equity ratios can provide the biggest payoffs. This ratio also tells investors how effectively their capital is being reinvested, so it is a good gauge of management's money handling skills. Ford is showing a considerable turn around in this area this past year, which could easily be due to changes in management. They are also reasonably following the industry in this area.