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
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.
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...
The objective of this report is to give an overall view on research and analysis to regards of two companies, Wm Morrison Supermarkets Plc and Tesco Plc that I have chosen for. In this report, I will be comparing two companies’ financial analysis based on their comprehensive income and balance sheet for one year; and also will be comparing their generating cash ability, cash management and financial adaptability based on statement of cash flows for the past two year and also determine whether the two companies have the ability to repay their debts to their creditors, generating into cash and going concern which related to finance.
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.
In terms of financial performance both companies have performed well. This brief review will focus on the financial performance such as profitability, solvency and liquidity.
The ratio of 1.7 for the last two years indicates consistency, although a lower number is preferred. As a company produces high value product, this could be a satisfactory ratio. By comparing it to 2011 when a ratio was 2.9, in the last two years a ratio improved
H&M Hennes & Mauritz is a Swedish multinational company established in 1947, known for it’s clothing for men, women, teenagers and children. It is expanded to 53 countries and as of 2013 employed around 116,000 people. It is ranked as the second largest global clothing retailer. It generated $18.13 Billion revenue in the year 2013.
In 1837, James Gamble and William Procter, formerly of the UK, started a family-run soap and candle company after they married sisters. The company they formed so long ago grew to be an American multinational consumer goods company. This company is Procter & Gamble Co, better known as P&G.Its headquarters is located in Downtown Cincinnati, Ohio. Although it started out as a candle and soap manufacturer, today it offers a wide range of products in fabric and home care, health and grooming, beauty and baby, feminine and family care. Currently, P&G has 47 brands in its portfolio, 23 of which are worth a billion dollars and more and 14 which are worth about half a billion to a billion. Its slogan “Touching lives, improving life.” is a
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. Among the study’s findings were that the deciding factor of the predictor of bankruptcy should not be only a few ratios, as the measure of a company’s financial solvency may differ as the firm’s situations differ. The important question is to which ratios are to be used and of those ratios chosen, which ratios are given priority weight.
This is a publicly traded company in the US that has been ding quite well in the recent years. The company’s 10k filing for the year 2014. From this statement, the risks facing the company will be identified classified and suggestions made on how best to mitigate them in the subsequent areas. There are various areas that the risks can arise based on the company’s 10k filling (Mertz, 1999).
P&G is an international and famous consumer goods founded in United States by Williams Procter and James Gamble both from the United Kingdom since 1837 about 177 years ago. P&G manufactures diversified range of product such as personal care, cleaning items, beauty product, pets food, drugs, & other beverages. Their products are sold in more than 180 countries around the world through grocery and departmental stores and retailers. They are also among the world’s most profitable consumer product company, with highest amount of sales. Their products are recognized in most part of the world. Their company have an organizational strategy to touch the live of its employees which is the major strength and competitive advantage of the company.
Hennes & Mauritz AB (H&M) is a well-known fashion retailing firm that sells fast-fashion clothing for women and youngsters. It is based in Stockholm, Sweden. As of 2013, H&M operates around 2,600 stores in over 55 countries and employed around 116,000 work forces.