Company Financial Analysis: BMO Life Insurance Company
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BMO Life Insurance Company Financial Analysis Using the 5 different ratio analysis used earlier to analyse BMO life insurance company’s Q2-2015 Consolidated Income statement and Q2-2015 Consolidated Balance sheet. BMO’s profit margin is 9.79%1. Meaning BMO earns more net income per $1 of sales than some or even most of its competitors. This can be rated as favorable in comparison to its industry average of 9.58%. BMO’s days’ sales uncollected is 21.84days2 favorable when compared to its industry’s average of 98.59 days. This means that BMO can liquidate it receivables in lesser days than some or most of its competitors. BMO’s equity ratio shows that the owners of the company only owns 10.66%3 of the company’s assets. Compared to its industry…show more content… Which sense that, Sun Life earns more net income per $1 of sales than some or even most of its competitors. Sun life’s days’ sales uncollected 58.8days7 is favorable when compared to its industry’s average of 98.59 days. This means that Sun Life access its money in receivables faster than some or most of its competitors. Sun life’s equity ratio shows that the owners of the company only owns 10.18%8 of the company’s assets. Compared to its industry average, Sun Life can be rated as more favorable. Sun life’s debt ratio of 90.35%9 is higher than its equity ratio this is considered risky because the huge percentage of its asset is supported by debt. However, Compared to its industry average of 93.2% it is still considered favorable. Sun life’s return on total assets is 0.798%10 this favorable compared to its industry average of…show more content… Meaning RBC isn’t operating in efficiency compared to its industry.
BMO, RBC and Sun Life Insurance comparison
Of the three insurance companies Sun life has the highest profit margin. Meaning it is operating more efficiently and earning more per $1 in sales than its two competitors. Whereas, RBC has the lowest profit margin of the three; which is not favourable. When it comes to days’ sales uncollected, BMO has the highest number of days. This means that it takes more days for BMO to turn its receivables into cash than its two competitors. This is unfavourable compared to RBC’s which has the lowest days’ sales uncollected.
Equity ratio and debt ratio are both very important because it shows how much of the assets used for production is really owned by the owner of a company. According to calculations in the appendix, RBC has the highest equity ratio and the lowest debt ratio. This is considered favourable compared to Sun life and BMO’s equity and debt ratio. When it comes to return on total assets BMO has the highest return. Meaning it is earning more per assets than RBC and Sun