Entities, despite profitability level, may become bankrupt if it cannot cover obligations with short-term creditors. Liquidity ratios can be calculated from a company’s financial statements to determine their ability to meet short-term credit responsibilities. In most cases, the higher the resulting ratio, the more apt the firm is to pay their duties to creditors in the short-run (Gibson, 2011, p. 210. Vail Resorts days’ sales in receivables was 22.5 in 2010, compared with 21.7 days in the 2009 fiscal year (MSN Money, 2011). This suggests that the number of average days it requires to collect receivables has consistently risen, conveying a negative trend in the degree of control over credit collection. Most significantly, the number of days a debt is outstanding for fiscal year 2010 has increased by 47% since 2008. However, the extraordinarily high ratio results may not be a particularly reliable measure of liquidity due to the largely seasonal operating nature of the ski resort. The accounts receivable turnover ratio uses net sales and average gross receivable figures to produce a result more indicative of their liquidity. The turnover in 2008 was 24.58 times per year. 2009, according to MSN Money (2011), resulted in a turnover of 18.05 times annually. Credit accounts were reconciled 15.56 times per year in 2010. The negative trend appears to have dissipated when looking into 2011’s fiscal quarters; the most recent calculations show a turnover of 28.83 times (Morningstar, 2011). The primary asset used to gauge the ability to repay short-term debt is inventory, accounting for 28 percent of Vail Resorts’ current assets in 2010. For that year, it would have taken 25.57 days to use up inventory levels based on sales figures. ... ... middle of paper ... ...mbol=US%3aMTN MTN - Vail Resorts Inc Financial Ratios - Forbes.com. (2011, August 31). Forbes.com. Retrieved August 31, 2011, from finapps.forbes.com/finapps/jsp/finance/compinfo/Ratios.jsp?tkr=mtn MTN Competitors | Vail Resorts, Inc. Common Stock Stock - Yahoo! Finance. (2011, August 31). Yahoo Finance. Retrieved August 31, 2011, from finance.yahoo.com/q/co?s=MTN+Competitors Vail Resorts Inc. MTN Q4 2010 Earnings Call Transcript . (2010, September 23). Morningstar Stock, Mutual Fund, Hedge Fund, ETF Investment Research . Retrieved August 31, 2011, from http://www.morningstar.com/earnings/earnings-call-transcript.aspx?t=MTN&culture=en-US&pindex=8&qindex=11 SEC.gov. (2009, September 24). Form10k.htm. U.S. Securities and Exchange Commission (Home Page). Retrieved September 2, 2011, from http://www.sec.gov/Archives/edgar/data/812011/000081201109000030/form10k.htm
By lowering selling prices across the board, Opossumtown, Inc. reduced its inventory turnover ratio, cutting the number of days to sell inventory from 174 days to 104 days; that is a 40% improvement. Opossumtown, Inc. also cut the number of days it takes to collect its credit accounts from 68 to 44 days, again that is 35% better than the previous year. The company is able to do this while cutting its debt ratio by 10% and increasing its current ratio by 25%, making it appear more favorable in terms of liquidity. As promising as this may look, this is not the whole picture. Opossumtown, Inc. shows an 11% decline in gross profit as well as operating income ratios, and a 3% decrease on the profit margin ratio. The decline of these ratios is a result of the company’s new strategy of decreasing the selling price and increasing its marketing and selling expenses. Opossumtown, Inc. made some noteworthy advancements with the implementation of its new plan for 2014. However, based on the assessment of the balance sheet, income statement and the ratios, the corporation did not achieve its goal to increase operating income by 6% and net income by 4%. Opossumtown, Inc. was only able to grow its operating income by a little more than half of one percent and net income by
Form 10-K Chipotle Mexican Grill, Inc. (2011, February 17). Retrieved March 15, 2011, from U.S. Securities and Exchange Commission: http://www.sec.gov/archives/edgar/data/1058090/000119312511039010/d10k.htm#tx129308_27
Marriott Corporation is an international company who's the growth over the year has been more than satisfactory.
Liquidity measures a company's capacity to pay its debts as they come due. However, Wal-Mart’s current ratio is 0.93, Target current ratio is 1.11 and the industry ratio is 3.04, which is much higher, so I would say that it is good but needs improvement. The quick ratio for Wal-Mart is 1.04 and Target’s quick ratio is 0.21 and the industry ratio is 0.31, which is much higher. Wal-Mart’s is higher and needs some improvement and Target’s is good. Accounts receivable for Wal-Mart is 9 days and Target’s is 6 days, whereas an estimate for the industry is 17 days, which means that both of them are doing better than the industry standards. Target’s inventory ratio is 6.04 and Wal-Mart’s inventory ratio is 0.81, and the industry ratio 1.58. These numbers shows that Wal-Mart is good but Target needs improvement. Furthermore, based on this analysis, I would say that Wal-Mart and Target are doing well but both have areas that need improvement.
Since companies are often unable to sell their fixed assets within any reasonable amount of time they are carried on the balance sheet at cost regardless of their actual value. As a result, it is possible for companies to grossly inflate this number, leaving investors with questionable and hard-to-compare asset figures (Investopedia.com, 2003).
As of December 26, 2004, our liquid assets totaled $10,924,000. These assets consisted of cash and cash equivalents in the amount of $10,642,000 and short-term investments in the amount of $282,000. The working capital deficit increased slightly from $50,359,000 as of December 28, 2003 to $51,041,000 as of December 26, 2004. This increase was due primarily to increases in the loss reserve and unearned premiums related to the captive insurance subsidiary and accounts payable and was partially offset by increases in inventories and receivables.
Company name: The Vanguard Group Corporate headquarters: Valley Forge, Pennsylvania Founded: May 1, 1975 First fund: Wellington Fund (inception date: July 1, 1929) Offices: Valley Forge, Pennsylvania; Scottsdale, Arizona; Charlotte, North Carolina; Melbourne, Australia; Brussels, Belgium; Singapore; Tokyo, Japan Total assets: Approximately $850 billion in U.S. mutual funds (as of 05/31/2005) Number of funds: 130 domestic funds (including variable annuity portfolios); 35 additional funds in international markets Number of investors: 18 million institutional and individual shareholder accounts Chairman and CEO: John J. Brennan Number of employees (crew): More than 10,000 U.S.-based Largest fund: Vanguard® 500 Index Fund—$104 billion (Admiral™ and Investor share classes, as of 5/31/2005) Aggregate expense ratio: 0.23% (expenses as a percentage of 2004 average complex net assets) Mailing address: P.O. Box 2600, Valley Forge, PA 19482 Website address: www.Vanguard.com
...To check how successful it has been, we calculate debtor collection period ratio. (Dyson, 2004) Fixed Asset turnover: In this ratio, we seek the amount of sales that can be generated (or the amount of fixed assets necessary to achieve a level of sales) from a given level of fixed assets. (Klein, 1998) Total asset turnover: This ratio determines that how efficiently a firm is utilizing its assets. If the asset turnover ratio is high, the firm is using its assets effectively in generating sales. If this ratio is low, the firm may not be using its assets efficiently and shall either increase sales or eliminate some of the existing assets. (Argenti, 2002) Solvency Ratio Gearing: Gearing reflects the relationship between a company’s equity capital (ordinary shares and reserves) and its other form of long-term funding (preference share, debenture, etc.) (Black, 2000)
This ratio shows that a company can operate and meet its current obligations for 258 days and continue being solvent. The number of days significantly increased from 2012 and even 2011, which shows improvement.
Liquidity for a company is “the ability of a firm to meet its near-term obligations as they come due” ( Walther, Financial Accounting, 2011, Chapter 4, p.57 ). Investors and creditors look at how liquid a company is in order to determine the company’s ability to meet it’s scurrent obligations. Three ratios to be considered are Working Capital, the Current Ratio, and the Quick Ratio. Three companies have been chosen and their Annual Reports as reported to the Securities and Exchange Commission (SEC) will be reviewed. A determination for each company’s liquidity position will be discussed based on the findings and compared to Management’s view as stated in the Annual Reports. The three companies chosen are Dell Inc., Genesco Inc., and ConAgra Foods Inc.
The receivables turnover is based on the assumption that all sales are credit sales. The values of receivables turnover for 2004 and 2005 are 10.21 times and 8.83 times, respectively. This means that IQ’s efficiency is considerably declining in terms of cash collection. The decrease in receivables turnover is explained by the higher increase in average net receivables (71%) than the increase in net credit sales (25%).
The hospitality industry in the United States is large, complex and intensely competitive. Within this industry is a segment comprised of hotels and motels, which will be the relevant sector for this marketing plan. To note, the hotel and motel industry in the United States had an estimated value of $137.5 billion as of the end of 2012 (MarketLine, 2012). The industry is forecasted to experience a compound annual growth rate (CAGR) of 5.5% from 2011 to 2016, to attain a value of $179.5 billion (MarketLine, 2012). In this industry, the most lucrative segment is leisure which has a market share of 71.1% (MarketLine, 2012). Sunshine Inn (fictional) is a small independent hotel that operates within the leisure segment of the hotel and motel industry in the United States. It is an adventure-themed hotel situated along the California-Nevada border in order to capture the tourist market for Lake Tahoe. Sunshine Inn has 30 bedrooms and 15 suites and offers specialty home-cooked type meals to guests for breakfast, lunch and dinner. It must be emphasized that the hotel and motel industry is one of the most fiercely competitive in the United States, and in fact, in the world (Johanson & Cho, 2009; Kosarkoska, 2010). Therefore, in order to compete with large hotel chains with five-star hotel rankings, Sunshine Inn will have to depend on strategic approaches, such as effectively targeting and positioning itself in the appropriate market, as well as developing a marketing plan that will promote the unique value propositions that only small, personalized hotels can provide: excellent customer service, customized adventure packages as well as a total customer experience that revolves around enjoyment, fun and discovery. As this marketing plan wi...
Starbucks’ solvency ratios provide valuable insight into whether the company is generating sufficient cash flow to meet short-term and long-term obligations. At the end of 2014, Starbucks current assets of $4169 million and current liabilities of $3039 million produced a current ratio of 1.37. During this same period, Starbucks had quick assets of $2474 million (cash of $1708 million + short-term investments of $135 million + accounts receivable of $631 million) with current liabilities of $3039 million resulting in a quick ratio of 0.81. These ratios imply that Starbucks was reasonably liquid at the end of 2014 with $1.37 in current assets and $0.81 in quick assets for every $1 in current liabilities. In 2013, Starbucks had a current ratio of 1.02 and a quick ratio of 0.71 and the previous year the company’s current ratio was 1.90 with a quick ratio of 1.14. This data shows that Starbucks’ current ratio and quick ratio decreased considerably from 2012 to 2013 indicating a reduction in liquidity. Starbucks liabilities increased dramatically in 2013 because of an accrued
(2014). The. Tesla Motors, Inc. (TSLA) – Financials. Retrieved from: http://financials.morningstar.com/income-statement/is.html?t=TSLA®ion=usa&culture=en-US&ownerCountry=USA Tesla Motors Inc. - Form 10-K Annual Report, 2011. (2011). The 'Standard' of the 'Standard'.
By the 1980’s, the Marriot Corporation, founded in 1927, had grown into a financially sound, industry-leading corporation. Although MC went public in 1953 and continued to sell stock to the public, the Marriott family still retained the controlling interest of 25% of the company in 1992. Once J.W Marriott Sr. resigned in 1964, his son, J.W. Marriott Jr., took over the posi...