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 dividends record from the period 2001 to date is shown in the table below. The company has made quarterly payments based on the presentation of their annual financial reports to the shareholders. The price per share has been increasing on average which is an expected positive return for the shareholders.
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.
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
Financial leverage ratio that is the most appropriate is the Debt to Equity Ratio. The Debt to Equity ratio measures the amount of debt a company uses to finance their assets relative to the amount of shareholder’s equity. The higher the debt to equity the more debt is used to finance the business. Boeing obtained a ratio of 1.5728 and the Industry has a 1.7587 or in other words Boeing uses 18.59% less debt to finance their company.
This company has been performing well for many years and this this because of their good business model. Everything that was noticed on the income statement was the good performance of company. Their dividends have increased over time; this was due to increased profits. The earnings growth projections for the next four years have increased five percent.
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.
Notably, its share price has dropped 43% just in the last year, after the publication of the year losses of €6.8 billion (remarkably €2.8 billion more than the losses of 2008) . The ROE for the bank passed from 7.89% in 2010 to minus -9.02% at the end of 2015. Based on the figures in the latest interim report in July 2016 the ratio decreased further to -11.52% in June . Considering this trend, we need to take into account also that in recent years, the ROE was consistently below the cost of capital, eroding value. A company can increase its ROE in 2 ways: increasing the numerator - raising your net income - or decreasing the denominator – the equity capital. Banks represent generally a capital-intense business, and the introduction of tighter regulations is posing difficulties to the banks that aim to reduce their equity capital. It appears clear that the only way to achieve a better ROE is to attain a high financial leverage . The pre-financial crisis leverage level was impressive (71.73%), and today is 27.11%, above the standard of its direct competitors .The return on assets has also decreased in the last six years and has reached a negative level of -0.46%
As higher investors generally expect higher returns for a more leveraged firm (Arnold 2013 p 697) there would appear to be very little scope for the RM to increase its debt capital unless it can convince investors profits are likely to profit significantly. Unfortunately the annual report does not suggest such growth is likely short term, due to increased parcel competition and falling letter sales (RM 2015).
only make up 16.7% of the capital structure. Thus, the credit risk for any credit commitment was not too high
After the announcement of higher- than-expected profit on 31st July 2015, the share price went from 727.5p to
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.
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...
The basic earnings per ordinary share in 2016 is RM19.14 and RM14.30 in 2015. This shows that the ordinary share had been increased RM4.84 compare to 2016 based on 2015. In the other hand, this company had declared a first interim single-tier dividend of 10 sen per ordinary share amounting to RM22.88 million in respect of the financial year ended 31 December 2016. They sold their ordinary shares of RM400,000,000 units of RM0.50 per each in 2016 and RM200,000,000 units of RM0.50 per each in 2015 to their shareholders. It is increased from 2015 to 2016 with 200,000,000 units. The other investments that available for sale is RM1000 same as in 2015 and 2016.
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.
4. Harry Davis’s common stock is currently selling at $50 per share. Its last dividend (D0) was $4.19, and dividends are expected to grow at a constant rate of 5% in the foreseeable future. Harry Davis’s beta is 1.2, the yield on T-bonds is 7%, and the market risk premium is estimated to be 6%. For the bond yield plus risk premium approach, the firm uses a 4% point risk premium.