The purpose of this analysis is to provide some basic information of Amcor Limited that will help the shareholders in making investment decisions. This paper will use past four years information of the company’s financial data that we can find in Data analysis database. Based on that information, this paper will give the analysing results of profitability, liquidity, asset efficiency and gearing of the company and give suggestion whether the shareholders should continue investing in this company. However, this information will not give the best recommendation to the shareholder as there are many external factors that might change the company situation. So the shareholders must also consider the external factor such as government regulations. Based on past four years Amcor Limited’s financial data, we summarized the profitability, asset efficiency, liquidity, and gearing of the company. The profitability of the company can be expressed in the profit margin ratio and return on equity ratio. The profit margin ratio over past four years increased from 12.53% to 14.67%. Another ratio which is return on equity ratio also increased from 29.5% to 46.2% over the past four years. According to this result, the company has better control over its cost as the profit margin ratio increased and generates more profit from money that is invested by shareholders. The next analysis that should be considered is asset efficiency. The first ratio in asset efficiency is asset turnover ratio which increased from 1.00 in 2010 to 1.13 in 2011 and fall down into 1.04 in 2013. This result indicates the company was poor in using its asset to generate revenue. The other ratio is receivables turnover which increased from 7.06 in 2010 to 7.34 in 2012. However... ... middle of paper ... ...n the process of cash collection. The liquidity of this company has improvement over the ability to pay short term obligations. However, the company is not able to repay all debts using its most liquid assets or cash flow generated from company’s operations. Lastly, the gearing of the company is considered poor as the company is more depend on external lenders. Based on this analysis, we found out that the ability of this company to generate more money increased dramatically. However, the company is unable to repay all its debts as they do not have enough liquid assets. With this situation, we suggest the shareholder to continue to invest in this company in order to solve their financial problem and getting more profit. However, the shareholders also needs to consider the other aspects like new company regulations or government regulations before making a decision.
Net working capital represents organization’s operating liquidity. In order to compute the net working capital, total current assets are divided from total current liabilities. When there is sufficient excess of current assets over current liabilities, an organization might be considered sufficiently liquid. Another ratio that helps in assessing the operating liquidity of as company is a current ratio. The ratio is calculated by dividing the total current assets over total current liabilities. When the current ratio is high, the organization has enough of current assets to pay for the liabilities. Yet, another mean of calculating the organization’s debt-paying ability is the debt ratio. To calculate the ratio, total liabilities are divided by total assets. The computation gives information on what proportion of organization’s assets is financed by a debt, and what is the entity’s ability to pay for current and long term liabilities. Lower debt ratio is better, because the low liabilities require low debt payments. To be able to lend money, an organization’s current ratio has to fall above a certain level, also the debt ratio cannot rise above a certain threshold. Otherwise, the entity will not be able to lend money or will have to pay high penalties. The following steps can be undertaken by a company to keep the debt ratio within normal
The first financial ratio of the analysis is the Price to Earnings ratio (“P/E ratio”). The ratio is computed by dividing the price of one share of common stock, by the earnings per share of common stock. This analysis uses diluted earnings per share which assumes the issuance of new stock for all existing stock options. Also, the price of the stock was computed as an average of the fourth quarter high and low stock prices published in the 10K report of each company, because the year end stock prices were not listed for all the companies. Because the P/E ratio measures the relative costliness of different stocks, in relation to their income, it provides a useful place to begin the analysis.
However, financial situation of the firm plays a very important role in the decision of the bondholder and this company has been one of the most profitable companies America in terms of ROE, ROA ad gross profit margin. Apart from decrease in earnings and cash flow in 1997, UST had continuous increases in sales (10-year compound annual growth rate of 9%), earnings (11%) and cash flow (12%). They are generating their cash flows out of the operations. Thanks to their premium pricing, they are achieving more than average gross profit margin. So, over the years UST's revenues are stable and positive, and generally its statements are positive. The company does not have any problems with its cash flow.
DuPont is a very big company with a low debt policy designed to maximize financial flexibility and insulate operations from financial constraints. It is one of the few AAA rated manufacturing companies due its investments are primarily financed from internal sources. However, because prices fell in the 1960’s thus DuPont’s net income fell also. The adverse economic conditions in 1970’s escalated inflation: increase in oil prices increased required inventory investments of the company. 1975 recession negatively affected DuPont’s net income by 33% and returns on capital and earnings per share fell. The company cut dividends in 1974 and working capital investment removed. Proportion of debt increased from 7% in 1972 to 27% in 1975 and interest coverage falls from 38 to 4.6. The company perceived increase in debt temporary but moved quickly to reduce its debt ratio by decreasing capital expenditures. Debt proportion dropped to 20%, interest coverage increased to 11.5 by 1979.
In order to make inferences about a company’s financial condition, its operations, and its attractiveness as an investment we have analyzed financial ratios and compare ratios derived from SVU’s financial statements (see chart 1).
The first method we will review is the accounting method. Through this accounting approach we will analyze specific ratios and their possible impact on the company's performance. The specific ratios we will review include the return on total assets, return on equity, gross profit margin, earnings per share, price earnings ratio, debt to assets, debt to equity, accounts receivable turnover, total asset turnover, fixed asset turnover, and average collection period. I will explain each ratio in greater detail, and why I have included it in this analysis, when I give the results of each specific ratio calculation.
In regards to the corporation’s balance sheet, it is necessary to place an importance on liquidity ratios to demonstrate the company’s ability to pay its short term obligations such as accounts payable and notes that have a duration of less than one year. These commonly used liquidity ratios include the current ratio, quick ratio, and cash ratio. All three ratios are used to measure the liquidity of a company or business. The current ratio is used to indicate a business’s ability to meet maturing obligations. The quick ratio is used to indicate the company’s ability to pay off debt. Finally the cash ratio is used to measure the amount of capital as well short term counterparts a business has over its current liabilities.
...rs, setting a good trend for the corporation. They also have a very low debt-to-equity ratio, indicating that they have enough equity to easily pay off any funds acquired from creditors. As a creditor I would feel safe in lending them funds for any future projects or endeavors.
The company is heavy on assets, the debt ratio will only grow to 0.40. with the added $50M in debt. Also, the firm will benefit from an added $2M in a tax shield and be able to return $12.7M a year to its. stockholders and investors, instead of $8.9M if equity is raised. finance the acquisition of the company.
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.
It talks about the extensive global footprint of the company in the emerging markets and about how Flexibles Americas and The Diversified Products businesses are valued in the market. Acquisitions for value creation are to expanding market footprint, improve industry structure, add new technology and lower operating costs and accelerate growth are discussed. Amcor’s acquisitions are Nampak, Souza Cruz, Deluxe Packages, Alusa, Encon and Plastic Moulders. A shareholder value creation model, note on dividends and capital management are also included to encourage dialogue with shareholders.
Ratio analysis are useful tools when judging the performance of a company by weighing and evaluating the operating performance (Block-Hirt). There are 13 significant ratios that can separate by four main categories, profitability, asset utilization, liquidity and debt utilization ratios. The ratio analysis covered here consists of eight various ratios with at least one from each of these main categories. These ratios were used to compare and contrast the performance of Verizon versus AT& T over the years 2005 and 2006.
From the above table and the interpretation it could be observed that company has improved a lot and have good performance in 2012 which is also maintained in 2013. Thus it could be a better investment option.
The predicted changes will aid the management team to prepare for future adversities in the cash inflow and operational activities and prevent liquidity. From the spreadsheets, it can be concluded that the main problems that need to be solved before they get out of hand are Notes Payable (Balance Sheet).Other Expenses (Income statement) and the Effect of Exchange Rate on Cash Flows. If these will take care of, the profitability and financial position of the company will no longer be
Financial statement analysis is used to identify the trends and relationships between financial statement items. Both internal management and external user such as analysts, creditors and investors of the financial statements need to evaluate a company’s profitability, liquidity and solvency. The most common methods used for financial statement analysis are comparative statements, common-size statements, fund flow analysis and ratio analysis. These methods include calculations and comparisons of the results to historical company data, competitors, or industry averages to determine the relative strength and the performance of the company being analyzed. For this assignment I have chosen Telecommunication Company, Digi.Com Berhad and Maxis Berhad for evaluating their financial performance based on the calculated...