The company’s strong liquidity shows that the company is able to operate at no risk of liquidation in the short run. Weak liquidity is a forerunner to bankruptcy. Financing operations is a problem when the company is weak in its liquidity. The company should continue to promote sales to ensure more liquid assets are available in the company and this
The recurring operating loss, negative cash flows from operating activities and the stock price which reduced to all-time low in 2008 all showed the negative financial trend. Moreover, auditors could discover the GM management’s plans to dispose of...
This company has a large amount of assets, they total out at about 124,213. They have more assets than actually cash on hand. This company has no short-term debt, the only debt they have is short-term. There is a section called other assets this, has increased by a lot. The fixed assets have increased by a lot in this company.
This is evidenced by the fact that the company has reported positive growth in revenue, gross margin and operating margin. Revenue grew by 22.3% from 2009 to 2010 and by 26.1% from 2010 to 2011. The increase in gross margin and operating margin shows that management maintained strong control over the cost of sales and selling, general and administrative expenses from 2009 to 2011. Another element that shows strong performance is the results of return on capital employed, which is computed as profit before interest and tax divided by capital employed. Capital employed is obtained as total assets less current liabilities. (Jones, 2014). The return on capital employed was 61% for 2009 and 2010 and 54% for 2011. These results show that the company is making efficient use of capital received from
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. 1. Some key points of the company’s financial picture that could impact the bank officer’s decision are as follows: while there is an increase in gross profits from year 12 to 13, there is a decrease from year 13 to 14, also while the payroll and executive compensations steadily increases from year 12 to 14, advertising basically decreases, and services and utilities continue to increase as well as expenses in general. The operating income also has a major decrease from year 12 to 14, which is not good for the company as it indicates what is available to the company before a few other items need to be paid, such as preferred stock dividends and income taxes, which needs to be increasing for the company, not decreasing. Then finally, the net earnings start out in year 12 at $140,250 go to $96,900 in year 13, then finally go way down to $16,725 by year 14. This is not good regarding the bank loan because it can lead to a drop of safety nets for the company, which also shows the company with an increase in net loss, which could mean repayment to the bank loan could get into trouble. In reviewing the balance sheets, regarding the assets, you can see that the cash and cash equivalents increase from year 12 to 14, while the accounts receivable do not. Thus showing the total current assets, with a major increase from year 12 to 13, but then a decrease from year 13 to 14, with the total assets following suit. The balance sheets show the liabilities to do the same as assets from year 12 to 13, with an increase, then showing a decrease from year 13 to 14. However, once reviewing the long term liabilities, you can see that all years 12 to 14, show a steady decrease, which is a good thing, because not all debt is bad and long term liabili...
The Statement of financial position is a very useful tool full of information showing the position of an entity. However within this sheet of information lies a lot of limitations and problems. This essay will pinpoint some of the limitations and problems within the balance sheet. These limitations include how the balance sheet does not reflect the true financial position of a business, it does not reflect assets that can’t be measured monetarily and it also has a huge amount of estimated values and not actual verified values so this causes some controversy within the entity and its true position on the market. As well as the problems within the balance sheet there also lies a lot of problems with what’s left out of the balance sheet.
Another highlight of the company was the company’s gross margin, which was 32.8 in 2012, just a little more than the 31.9 in 2011 and their selling rate went down by 20.9
Waldron produced net profit margins of 15% in 2012 and 20% in 2013 it shows that is positive fore shareholders, however, it is important that Waldron identify what is the minimum to survive in order to ensure that they do not get into in a dangerous position, the objective is control of gross profit for each division and compare with what Waldron planned
The main contributing factor to the decline in the return on stockholders’ equity (25.37% to 8.73%) was the decline in the profit margin (11.79% vs. 5.08%). The decrease in asset turnover (1.11 to 1.00) made a small contribution to the decline, as did the decline in the debt ratio (48.4% to 41.8%).