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.
It is calculated as: Total assets divide by total equity. As equity multiplier calculates leverage, the higher EM indicates that a bigger portion of asset financing is being used through debt. The smaller amount of equity multiplier is better, because it spends less money to fund an asset. As we can see on the tables, the EM of Citi Group was 12.161 times in 2009 and 11.706 times in 2015 respectively, it had decreased by 0.455 times due to bigger increase in total equity which was $154.17 billion dollars in 2009 and $157.33 billion dollars in 2010. In general, both Citi bank Group and Bank of America used less equity capital to funds their assets after financial crisis.
However, TWR had a higher price/earnings ratio. This is good for Competition Bikes, shareholders since it takes a shorter*** time to recover the market value of equity compared to TWR shareholders. In year 8, Competition Bikes witnessed an adverse decline in time interest earned. The high time interest earned of 4.24 for TWR indicates that the operating profit can pay interest charges 4.24 times compared to 1.77 in Competition
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.
According to the Commerce Department, the total value of goods and services slowed to 2.3% with a previous rate of 1.8% last year. The gradual decrease in growth indicates that the economy may be reducing to a more sustainable pace, and avoid another intererst rate increase from the Fed. The increase in employment costs may yet sway the Fed to to raise interest rates, but July will be decisive. Consumer consumption has fallen from 6% in increase in 1998 to 4% in 1999. The fall in consumer consumption has had its toll on the GDP as it too has slowed.
While Amazon was making the most profit in 2013, Amazon actually lost money in the years 2012 and 2014 but in 2014, Amazon lost more profit than in 2012, making it Amazon’s worst year over the 3-year period. Suggestions for Improvement: Although in the year 2013, Amazon’s return on assets was the highest over the 3-year period, Amazon was still not making much profit. The return on assets that are over 5% is considered good and Amazon’s return on assets was a lot lower than 5% over the past 3 years. In order to raise the percentage on the return on assets, Amazon is going to have to make more profit but because Amazon makes large investments, Amazon’s return on assets is quite low because of the money that is being used on investments. EARNINGS PER
First of all, the SML equation solves for the required return on stock by using the risk-free rate plus the product of the beta of the stock and the market risk premium (Brigham & Ehrhardt, 2015). For example, an investor is comparing stocks available for purchase from Johnson Manufacturing and Dyer Industries. The betas for the stocks are 1.0 and 1.5 respectively, the risk-free rate is 6%, and the market risk premium is 5%. The required rate of return for Johnson Manufacturing is 11% and the required rate of return for Dyer Industries is 13.5%. Due to the lower risk or beta of the Johnson stock, the investor would expect the rate of return to be at 11%.
The EPS ratio for PPGL shows a decreasing trend, as it drops from $2.76 in 2009 to -$31.96 in 2013 with its peak in 2011 at $3.19. This reflects the decreasing profitability ratios. HGHL on the other hand shows an overall percentage increase of 45.61% as over the five year period, the ratio rises from $21.97 to $31.99 in 2013. HGHL is the safer company to invest in because the ratio shows there are more earnings per share available to investors. The DPS ratio allows shareholders to examine the proportion of earning that will be paid out as dividends.
John Deere had a decrease of $7,204.1 million (consolidated income), while Caterpillar had a decrease of $8,173 million (consolidated income). • To make things worse, it appears that there are some efficiency factors coming into play, as EBIT for both companies fell by more than the decrease in sales. For Caterpillar, equipment sales fell 15.3%, while consolidated EBIT fell 43.8%, and for John Deere, a 21.8% decrease in equipment-related sales led to a 42.0% decrease in consolidated
The company’s strategic issues include slow sales growth, net income loss and too much debt. Many of these issues affect the company as a whole. Best Buy began to experience slow sales growth in 2011. Sales growth slowed down from $49,694,000,000 in 2009 to $50,272,000,000 in 2010. Sales growth slowed down even more from $50,272,000,000 in 2010 to $50,705,000 in 2011.