Profitability: According to the income statement, the profit margin ratio decreases as well with 2.5%. However, the sale revenue has a rise in this period actually and it means the company spends more money on operating expense. Therefore this increase on operating expense indicates a worse control of expense. On the positive side, the ROCE of 2014 and 2015 maintains approximately 30%, it exceeds the industry average (25%). The high ROCE can be caused by the high asset turnover. Obviously, the rate of return on capital employed is much higher than the rate at which the company borrows. While there has been a slight decrease (0.44%) from 2014 to 2015 in return on shareholder’s fund. The primary factors of leading this decrease are the declining …show more content…
It has seen a slight decrease in structure of capital from 74.87% in 2014 to 72.72% in 2015, and long-term liability equal about almost triple of equity. Total liability make up about 83% of total asset and this percent exceeds the industry norm (60%). Furthermore, if the gearing ratio continues to increase means the risk of insolvency will be higher. Financial leverage ratio has dropped from 3.66:1 in 2014 to 3.98:1 in 2015, which leads to a lower inherent risk in a change in return on equity. While a lower financial leverage ratio reduces the return on equity. According to the interest cover ratio shows, the interest payable is much less than earning that the company acquires through borrowing, the excess return goes to the benefit of equity investors. These strong ratios provide the project to Flybe plc 's creditors. As a result, the Flybe plc has the strength to take on additional debt. A risky structure of capital might be able to be regarded as an opportunity by …show more content…
Earnings per share figures for 2014 and 2015 are adjusted to exclude the effect of acquisition, restructuring and unusual charges while earning per share decreases from 60.7p in 2014 to 55.4p in 2015. There has been an increase in terms of dividend per share over the same period due to increasing dividends that the company should pay to investors. Therefore, it leads to a rise of dividend payout ratio with 11.02%. The point that investors should pay more attention is the dividend payout ratio exceeds 50% in 2015. However, the dividend yield ratio drops in the same time might by an increase of dividend tax. These ratios reflect the market 's appreciation and confidence in Flybe plc 's prior and expected performance. Investors can make a divination of stock price through these
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
The first analysis will be on Verizon. The current ratio and the debt to equity ratio both improved in 2006 when compared to 2005. However, the net profit margin dropped from 9.8% to 7.0%. What does this tell us as investors...
From the table 3 it is indicated that the current ratio of British Petroleum is higher than one both in the recent financial statements i.e. of 2014 and in the financial statement of previous year i.e. of 2013. In 2013 the current ratio of British Petroleum is 1.33 which indicates that the company has sufficient current assets to satisfy it short term liabilities. However, the current ratio in 2014 is 1.37 (BP Global, 2014) indicating increase and depicting that is in position to satisfy its short term debts. Thus this indicates the strength of company in satisfying its debt.
Measuring the liquidity through the current ratio, with 2.74 in the year 2009,0.74 above the standard, with the decline in the following year meeting exactly the standard at 2% in the year 2010, and a steep decline in the year 2011-2012 as compared to its standard.Resulting in the decline in firm’s ability to meet its day-to-day operating expenses. The current liabilities from 2009 to 2012 have increased by 27.03 billion whereas the investments in current assets have increased just by 26.09 billion, which causes the decline in the current ratio. To cope up with this problem the company should invest more in current assets and should reduce its current liabilities.
A company’s dividend policy is a major driver behind investors’ willingness to buy into the company. When a company has a consistent dividend policy, investors are more likely to want to invest in a company. This is the case when considering Team Baldwin. The dividends that were paid out were $1.75, $2.75, and $4.00. Andrews’ dividends were $5.66, $0, and $2.08. Baldwin’s consistently increasing dividends were very attractive to shareholders which helped to boost stock price. The fluctuating and sometimes nonexistent dividends of Team Andrews was a contributing factor of why their stock price declined each
Looking at the individual ratios seen in exhibit 1 and comparing it to the industry average shown in exhibit 2 gives a sense of where this company stands. Current ratio and quick ratio are really low and have been decreasing. For 1995, the current ratio is 1.15:1, which is less than the industry average of 1.60:1, however to give a better sense of where this stands in the industry, as seen in exhibit 3, it is actually less than the average of the bottom 25% of the industry. The quick ratio is 0.61 is less than the industry is 0.90. Both these ratios serve to point out the lack of cash in this company. The cash flow has been decreasing because, it takes longer to get the money from customers, but the company still needs to pay for its purchases. Also, the company couldn’t go over the $400,000 loan limit, so they were forced to stretch their cash.
The return on equity for the company stood at 18.71% in 2009 as compared to 20.90% for the year 2008 which shows a declining trend. The investors are always keen to see high returns on their investments, but here the return on their equity is declining. It is a negative number for the company and if the trend continues the investors will lose the confidence in the company and will cease to invest in the company.
All profitability ratios for Billabong are negative for the company. As calculated in appendix 2.1, the return on equity ratio has declined annually and is at -4% in 2013. A high sustained ratio is attractive to any investor but Billabong’s ROE is undesirable. A downward trend is also seen for the return on assets ratio which has decreased from 13% in 2009 to only 2% in 2013. This means the company is unable to generate significant profits from the assets invested. The gross profit margin and profit margin show that Billabong is not making substantial earnings in 2012 and 2013. Comparatively, the cash flow to sales ratio also states that the business is not generating high earnings from their sales. Moreover, the company does not issue dividends in 2013 which is a large contrast to 2011 where the dividend payout rate was 115%.
Current Ratio – For the last three years was growing from 3.56 in 2001 to 3.81 in 2002 to 4.22 in 2003. The reason of grow is increased in Assets. Even though Liability was growing, Asset grow was more significant.
During the last eight quarter, debt to assets ratio increased from 62% to 68% and the reason for that is because the total assets have decreased from $12.3 billion to $9.7 billion. Total liabilities have decreased as well from $7.6 billion to $6.6 billion. Even though both assets and liabilities decreased, assets decreased by much high percentage than liabilities did. For the last six quarters, the times interest earned ratio was negative which means that the EBIT was negative. Along with that, the EBIT is decline more and more every quarter. During the third quarter in 2011, EBIT was -$171 million and during the fourth quarter in 2012, it was -$745 million. Overall, both liquid and leverage ratios indicate the financial health of the company is declining. Company is losing assets (mostly cash) and they are not as liquid as they used to be. The assumption is that the company will be out of cash by the end of 2013.
Debit ratio-the ratio of liabilities to assets indicates that their liabilities are increasing as a proportion of total assets. This is having an affect on the Times Interest Earned ratio, which is deteriorating rapidly. It also indicates their obligations are growing- another indication of potential cash flow problems and an inherent risk to a going concern issue that might influence the potential manipulation of the financial
The increasing trend in the quick ratio from 4.7 to 7.7 during 2013 – 2014 shows that its quick assets are more as compared to its current liabilities. This shows that the firm is easily paying off its current liabilities. Similarly, the increasing trend in the current ratio reflects that the firm is easily paying off its current debts by using profits generated from its current operations. Likewise, the increasing trend in the asset turnover ratio means that the firm is using its assets productively.
Any successful business owner or investor is constantly evaluating the performance of the companies they are involved with, comparing historical figures with its industry competitors, and even with successful businesses from other industries. To complete a thorough examination of any company's effectiveness, however, more needs to be looked at than the easily attainable numbers like sales, profits, and total assets. Luckily, there are many well-tested ratios out there that make the task a bit less daunting. Financial ratio analysis helps identify and quantify a company's strengths and weaknesses, evaluate its financial position, and shows potential risks. As with any other form of analysis, financial ratios aren't definitive and their results shouldn't be viewed as the only possibilities. However, when used in conjuncture with various other business evaluation processes, financial ratios are invaluable. By examining Ford Motor Company's financial ratios, along with a few other company factors, this report will give a clear picture of how the company is doing now and should do in the future.
The benefits of these assumptions are that while maintaining the current growth rate of 13%; we can maintain our COGS. One of the major factors contributing to the firm’s poor profit margin is operating expenses.
Furthermore, Cocoaland Holdings Berhad has the total revenue of RM50,000,000 in 2015 and RM10,000,000 in 2016. It can be seen that decrease RM40,000,000 compare to this both years. Additionally, this company’s debt consists of 34,685,858 in 2015 and 38,057,668 in 2016. Moreover, it consists of total equity and debt-to-equity ratio inside their capital that is 202,680,654 and 0.17 in 2015 and 2015239,503,310 and 0.16 in 2016. It can conclude that total equity increased and the debt-to-equity ratio was decreased compare to 2015 to