Introduction This report intends to assist the parents with their decision with which company to invest in. They would like to know the safest and most financially secure company out of Postie Plus Group Limited and Hallenstein Glasson Holdings Limited. Ratio analysis over the previous five years will be used to select the company associated with less risk. The ratio groups involved are Liquidity, Financial Structure, Asset Management, Profitability, Growth and Market Test. Also the Cash Flow analysis and non-financial analysis will be taken into consideration. Company Introduction PPGL is a New Zealand owned company originating around 100 years ago. There are over 80 stores nationwide which provides employment to approximately 650 staff. The organisation supplies apparel, beauty products and accessories. HGHL was formed more recently in 1985, and today is considered New Zealand’s leading specialty retailer. They operate around 110 stores worldwide, 25 of which are in Australia alone. This company provides both menswear and womenswear. Liquidity Ratios The CR examines the proportion of current assets compared with current liabilities the company has. People consider 1:1 to be an acceptable CR relationship; however 2:1 is preferable because the amount of assets double the amount of liabilities. PPGL witnesses a dramatic decrease in the CR. In 2009, the ratio exceeded the acceptable ratio at 1.79:1. By 2013, the ratio decreased to 0.91:1. Investors consider this unfavourable because of the 49.16% reduction. Contrariwise, HGHL demonstrates a CR of 1.92:1 in 2009 which increases to 2.40:1 in 2013. It rises above the ideal ratio, making it advantageous to an investor, because it proves the company owns enough current assets to cover... ... middle of paper ... ... for $9 million. Retrieved from http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11186811 HallensteinGlasson. (2008, December 18). Hallenstein glasson holdings limited. Retrieved from http://www.hallensteinglasson.co.nz/voola/Services/FileStream.ashx?id=0edbd8b0-bbbe-4037-9b16-17d0363493c1 HallensteinGlasson. (2012, August 1). Hallenstein glasson holdings limited. Retrieved from http://www.hallensteinglasson.co.nz/voola/Services/FileStream.ashx?id=0227c5fd-f239-4ad1-8adc-21251462ef88 Stuff. (2009, January 1). Hallenstein glasson upgrading stores to boost sales . Retrieved from http://www.stuff.co.nz/business/172826/Hallenstein-Glasson-upgrading-stores-to-boost-sales Stuff. (2013, September 26). Hallensteins cuts strategy from new cloth. Retrieved from http://www.stuff.co.nz/business/industries/9212606/Hallensteins-cuts-strategy-from-new-cloth
Net working capital represents organization’s operating liquidity. In order to compute the net working capital, total current assets are divided from total current liabilities. When there is sufficient excess of current assets over current liabilities, an organization might be considered sufficiently liquid. Another ratio that helps in assessing the operating liquidity of as company is a current ratio. The ratio is calculated by dividing the total current assets over total current liabilities. When the current ratio is high, the organization has enough of current assets to pay for the liabilities. Yet, another mean of calculating the organization’s debt-paying ability is the debt ratio. To calculate the ratio, total liabilities are divided by total assets. The computation gives information on what proportion of organization’s assets is financed by a debt, and what is the entity’s ability to pay for current and long term liabilities. Lower debt ratio is better, because the low liabilities require low debt payments. To be able to lend money, an organization’s current ratio has to fall above a certain level, also the debt ratio cannot rise above a certain threshold. Otherwise, the entity will not be able to lend money or will have to pay high penalties. The following steps can be undertaken by a company to keep the debt ratio within normal
The purpose of this report is to indicate the financial position of British Petroleum as compared to its competitors. British Petroleum is the world’s seven super major valuable oil and Gas Company and is the constituent of FTSE 100. The company operates through 17800 service stations all over the world and produces about 3.2 billion barrels per day. The company conducts in operations in almost 80 countries. By market capitalisation the company is ranked at sixth position and has been ranked as fifth in terms of revenue generation in the oil and gas industry. (British Petroleum , 2006). This report analyses the financial position of British Petroleum by analysing its current performance to its last year performance and by analysing the performance
The Current Ratio is calculated by taking the current debt and dividing it by the current liabilities. It is the measurement on how a company can meet its short term liabilities with liquid assets (Loth, Rihar, 2015a).A higher ratio indicates favorable activity. A company should be able to meet it responsibilities with its
...ly known as Fifth & Pacific Companies, Inc. and renamed to Kate Spade & Company in February 2014.
In order to make inferences about a company’s financial condition, its operations, and its attractiveness as an investment we have analyzed financial ratios and compare ratios derived from SVU’s financial statements (see chart 1).
Currently, HCA is approaching an all time high debt ratio of 70%, well above their established target ratio of 60%. The increase in debt ratio has attracted the attention of rating agencies who have clearly stated that in order for HCA to maintain their A bond rating HCA must return to their 60-40 capital structure. Now the question arises as to whether the A rating should be sought or should HCA move to a less conservative position. Some investors believe that a more aggressive use of leverage would present greater opportunities in the future. Others feel that with changes in Medicare/Medicaid reimbursement structure on the horizon, HCA should remain conservative. In order to decrease the debt ratio, HCA would have to 1) decrease the growth rate (inadvertently decreasing ROE) or 2) decrease debt/increase equity. The debt ratio is important for many reasons, but it should not be the basis of a company's future. The market will ultimately decide the value based on numerous facts, not just the bond rating.
The current ratio is defined as Current assets/ Current liabilities. In the year 2012, the current ratio is 1.04 while it increases to 1.11 in the year 2013. Current ratio of more than 1 shows adequate liquidity of the firm but it should be around 2. However, we can see that there is a minor increase in the current ratio but it is expected to rise more in future.
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.
Starting a company such as one with over 3000 stores in 9 countries comes from a small seed and grows into a giant tree sprouting in all different directions and this is what Gap Inc. has done. Any person who has heard of or knows of Gap needs to understand how Gap exploded into a multi-branch mega business that has taken over the contemporary and affordable fashion industry. It also has become the new way to start a clothing line, by taking a single simple idea and blowing it up into a giant multi retail collaboration. Now a reason such as opening a store because you couldn’t fit in a pair of jeans shows something. It shows the amount of ambitio...
Assessing the capital structure of any firm is important for investors attempting to determine if...
In regards to the corporation’s balance sheet, it is necessary to place an importance on liquidity ratios to demonstrate the company’s ability to pay its short term obligations such as accounts payable and notes that have a duration of less than one year. These commonly used liquidity ratios include the current ratio, quick ratio, and cash ratio. All three ratios are used to measure the liquidity of a company or business. The current ratio is used to indicate a business’s ability to meet maturing obligations. The quick ratio is used to indicate the company’s ability to pay off debt. Finally the cash ratio is used to measure the amount of capital as well short term counterparts a business has over its current liabilities.
Introduction The purpose of this report is to undertake financial analysis of the position of the three major supermarket chains (Tesco plc, Morrison plc and Sainsbury plc) in the UK, using the financial tools such as Horizontal and Vertical Analysis and Ratio Analysis. The calculations done are considering the figures from the income statement and balance sheet of these three companies for the last 2 years (2008 & 2007). Doing these calculations is an effort to find out the current position and if any forecast on their performance. Tesco Plc *Interpreting the Horizontal and Vertical *Analysis The balance sheet’s horizontal analysis reveals the first worrying statistics about the company- the fact that stock level has increased by 25.84% in the year, even though net assets have increased by only 12.59%. The vertical analysis of the balance sheet again highlights the increase in amount of stock held by the company at the end of 2008 and increase in current assets. Interpreting the Ratio Analysis By looking at the ROCE* ratio it is clear that the business has not generated any higher return in the period 2007-2008. Though there is a marginal decrease in the returns (0.14% from 0.16%), however when compared with returns of other competitors Tesco plc has performed much better. Drop in asset utilisation ratio in the year 2008 indicates that the company did not use its assets efficiently to generate sales. As a result profit margin dropped down to 5.91% in 2008 from 6.21% in the year 2007. The Acid test ratio also doesn’t meet the ‘ideal’ ratio of 1:1. In other words Tesco had only 38p of quickly realisable assets to meet each £1 of current liabilities. Stock turn shows the effect of increased stock at the end of 2008 as it s...
Ratios traditionally measure the most important factors such as liquidity, solvency and profitability, as well as other measures of solvency. Different studies have found various ratios to be the most efficient indicators of solvency. Studies of ratio analysis began in the 1930’s, with several studies of the concluding that firms with the potential to file bankruptcy all exhibited different ratios than those companies that were financially sound.
The Quick Ratio shows that the company’s cash and cash equivalents are the highest t...
The current ratio and quick ratios for the year 2003 are at 2.5 and 1.3, which are both higher than the industry average. The company has enough to cover short term bills and expenses. Both the current and quick ratios are showing an upward trend compared to 2001 and 2002. The current assets decreased by $ 20,264 to $ 1,531,181 and the current liabilities also decreased considerably by $255,402 to $616,000, a 29.3% decline, thus making the current ratio jump to a 2.5. The biggest decline was seen is accounts payable which decreased by $170,500 to $230,000, a decline of 42.6 %.