...able to identify between the both which is superior to the other. Comparing the gross and net margins between the two companies, Linamar has a slightly higher margin in year end which is a good indicator that the company was in good financial standing in comparison to Magna Intl. In terms of ratios comparing both companies together Linamar with a 1.13 year end quick ratio and their current ratio was 1.72 which was significantly higher than Magna Intl as they had a quick ratio ending with 0.4 and a current ratio to 1.31. The current ratio is purpose is generally to give an awareness of the company's ability to pay back its liabilities using its assets. The difference between the numbers make it clear that Linamar did significantly better in terms of paying back their investors short term and long term. As we compare the long term debt to equity Magna Intl. was doing better than Linamar has their long term debt was less, meaning they paid for most of their ventures and expenses using their company assets. In terms of working capital Linamar had a significantly higher working capital as well which helps measure it’s short-term financial standing and makes the company’s efficiency clear. The inventory turnover rate between both companies shows that Magna Intl at a 11.5x and Linamar at a 9.17x, which shows that Magna Intl had effective and strong sales, while Linamar has excess inventory due to poor sales. Comparing all statistics, the 2014 year-end numbers have shown that Linamar...
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...An indication of a company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is. Current ratio is equal to current assets divided by current liabilities. If the current assets of a company are more than twice the current liabilities, then that company is generally considered to have good short-term financial strength. If current liablities exceed current assets, then the company may have problems meeting its short-term obligations. For example, if XYZ Company's total current assets are $10,000,000, and its total current liabilities are $8,000,000, then its current ratio would be $10,000,000 divided by $8,000,000, which is equal to 1.25. XYZ Company would be in relatively good short-term financial standing. And according to the information of Morgan company and Parker company, by comparing the two companies the current ration of Morgan it shows that Morgan in each year increases liabilities while Parker increases assets and so in meeting current obligations it seems that parker is able to increase his current obligations than Morgan because in each year he increases assets and reduces liabilities than Morgan who increases liabilities more than assets! Acidic test ratio is a stringent indicator that determines whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory. The acid-test ratio is far more strenuous than the working capital ratio, primarily because the working capital ratio...
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...Running head: COMPARING FINANCIAL REPORTS BETWEEN A&F AND H&M 1 A Comparison in the Financial Accounting Methods Used by Abercrombie & Fitch and H&M January 2012 COMPARING FINANCIAL REPORTS BETWEEN A&F AND H&M 2 Abstract Financial accounting encompasses compiling operating figures that any business or organization uses to account for their operations. For business strict guidelines must be followed to be in compliance with Security and Exchange Commission (SEC) rules when filing annual reports. This paper will examine, compare and contrast the differences in accounting styles and profitability of two clothing retail giants. Abercrombie & Fitch (A&F) is a domestic retailer based out of Ohio with over 300 outlets in the United States and Hennes & Mauritz AB (H&M) a Swedish outfit that is by sales the world’s second largest clothing retailer. The income statement, balance sheet and cash flow statement from each company’s annual report will be compared and contrasted to examine differences in style and methodology. COMPARING FINANCIAL REPORTS BETWEEN A&F AND H&M 3 A Comparison in the Financial Accounting Methods Used by Abercrombie & Fitch and H&M The scope of this paper is to examine, compare and contrast the differences in accounting styles...
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...------------------------------------------------- New Heritage Doll Co. ------------------------------------------------- Capital Budgeting [Author] New Heritage Doll Company: Capital Budgeting In the case of the New Heritage Doll Company, Emily Harris, Vice President of the company’s production division, is in the process of reviewing and analyzing two capital budgeting proposals within her division. Both proposals intend to spur long-term growth and to strengthen the division’s innovative product lines. Based on various financial and logistical constraints, Harris would only be able to choose one of the projects. The first project, proposed by Marcy McAdams, involves expanding the Match My Doll Clothing Line (MMDC). The second project proposed by Elizabeth Holtz, aims to introduce customization to the existing doll line, Design Your Own Doll (DYOD). In order to correctly identify which project is more compelling and valuable, Harris needs to carefully evaluate the projects based on qualitative and quantitative metrics such as the NPV, payback period, IRR and how well each project is aligned with corporate goals and strategies. When comparing the value of two proposals within a division it is important to not only compare the net present value of the two, but to also consider how each project aligns with the company’s high-level strategies, core competencies and manufacturing capabilities. Unlike the DYOD proposal, MMDC has already established itself as a successful...
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... Debt Ratio | Total Liabilities ÷ Shareholders Equity | 4000 = 2.5 8000 | 4000 = 2.5 8000 | Net Profit Ratio | Net Profit x100 Sales | 6000 x100 =15% 40000 | 4000 x100 =6.67% 60000 | Return on Owner’s Capital | Net Profit after Tax – Preferance dividend x100 Equity share | 6000 x100 = 15% 40000 | 4000 x100 = 8.33% 48000 | The current asset ratio is one commonly used tool that measures the liquidity and financial position of a company. This ratio is used to determine how well a company is able to pay its short- term liabilities.A ratio of two or higher is considered good. Companies with ratios of two or higher are often more likely to have fewer issues paying their debts.So as you can see, in Thor Trading Enterprises ratio rates are higher than two so the company will have NO issues paying their debts. However,comparing to 2011 Ratio rate it has fallen by 66.7% which is noticable. The quick ratio is a measure of a company's ability to meet its short term obligations using its most luquid assets. Quick ratio is viewed as a sign of a company's financial...
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...Summary Comparing different companies under different rules, or comparing one company in different time period can be complicating and often misleading when differences in accounting methods are not captured. In this essay, I will start the analysis by examining each firm’s change in accounting methods compared to their previous year. Then I will move on to comparing the three companies’ ratios to conduct analysis of each company based on the DuPont Method. In addition, I will also look at how changes in accounting methods affected Seven and I holdings’ results in 2013 when compared to 2012. Finally, I will conclude my analysis on how comparable it was under different accounting methods based on above analysis. _____ Three Companies Chosen for Analysis For this ratio analysis assignment, I chose three companies from the UK, US and Japan: Walmart Country: US Industry: Supermarket Retail Accounting Standard: GAAP TESCO Country: UK Industry: Supermarket Retail Accounting Standard: IFRS Seven and I Holdings Country: Japan Industry: Supermarket Retail Accounting Standard: Japan Standard _____ Change/Amendments in Accounting Methods Walmart Even though there is a mention about recent accounting pronouncements and future adoption of those policies, there is and will be no effect in the firm’s net income, financial position or cash flows. Sainsbury Although there were two amendments effective from this annual reports, the firm has concluded...
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...Management. Introduction Two of the largest and most profitable corporations in the United States are the Atlanta, Georgia based Coca-Cola Company and the New York based Pepsi Cola Company. While both are called "colas" they both attempt to address the same target tastes but from different approaches. Coke was the first on market with what is still a "secret" formula and Pepsi followed with a similar (not exact) taste. Since taste is very much a factor of your personal likes, either or neither may appeal to you or seem sweeter (Inforefuge.com. 2011). This paper will discuss the similarities and differences in the processes used by Coca-Cola and PepsiCo for place, price, and promotion. Place and Price The marketing exposure of PepsiCo and Coca-Cola is everywhere ranging from commercials, billboards, and mail advertisements all over the world. Although they target the same markets, they both use different approaches to their marketing strategies. This is evident when comparing the two companies’ websites. When browsing the Coca-Cola website you will experience a more conservative style; there is not a variety of colors besides the traditional “Coca-Cola red” in which, most their products are packaged and advertised. It is the complete opposite for PepsiCo, as their website flashes promotions for free music downloads and reminds browsers that they are the official drink sponsor of the NFL. After browsing the websites and comparing the two, you will come to understand that...
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...Comparing IFRS to GAAP Serena Schulke ACC/291 March 21,2016 Emily Baculik Comparing IFRS to GAAP Comparing the IFRS and GAAP has been a three-week process for learning team F. Our team spent time discussing fair value measurements, component depreciation, revaluation of plant assets, development expense, development cost, contingent liabilities, and the differences between GAAP and IFRS accounting liabilities. Fair Value The GAAP fair value standards focus on the sale of an asset or the transfer of a liability using an exit price, unadjusted for transaction costs (Tran, 2012). Unlike GAAP, IFRSs standards are based on principle rather than on strict rules. IFRS requires some assets and liabilities to be measured at fair value in certain circumstances, the concept of fair value measurements in integral to the IASB’s conceptual framework (Tran, 2012). Component Depreciation Component depreciation is a method in which the parts or sections of property or individual depreciated at different rates. Component depreciation should be use by a business when it has items that will have product or assets that are the same with different useful lives (Business Dictionary,2016). Revaluation of Plant Assets Revaluation of plant assets is a change in the book value of assets, caused by a devaluation of the currency in which their value is recorded in the accounts (Business Dictionary, 2016). Revaluation of plant assets should be used for all of your plant assets to maintain...
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...in the return on owners’ equity. This has got the portfolio people worried. An analysis has to be made of the way the company has achieved its return on equity over the last 10 years. The focus should especially be on the 1993-1994 period and the quality of the returns on equity of 1985 and 1994 should be compared, as well as other key financial ratios. By doing these financial analysis we hope to find out why the return on shareholders’ equity is varying in time. {draw:frame} {draw:frame} {draw:frame} Results {draw:frame} {draw:frame} {draw:frame} Analysis In order to analyze the company’s financial performance, we make use of financial ratios; leverage ratios to show how heavily the company is in debt; liquidity ratios how easy cash can become available; efficiency ratios to measure the productive use of the assets; profitability ratios to measure the return on investments. This is done for the period 1985-1994 where possible, and the total analysis can be found in the added excel file. 1985-1994 {draw:frame} If the operating profit margin increases than every sales gives you more money which results in a higher return on equity. If the asset turnover increases, more sales are generated for every unit of asset and the return on equity is also higher. Furthermore, when the financial leverage is increased, it entails that the company uses more debt financing relative to equity financing. A higher proportion of debt in the capital structure leads to a...
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... 3 Horizontal Analysis There are several methods used by companies and investors to assess a business’s overall financial health. One such method is horizontal analysis, which compares the financials of a company’s balance sheet and their income statements over two or more accounting periods. Comparing these numbers over a defined period of time enables the management and potential investors to see if the financial situation of the company is improving or time or not and what factors may be contributing to the increases or decreases in specific areas. For Competition Bikes, Inc. horizontal analysis, years 6, 7 and 8 were compared. Looking first at the comparable income statements we see that comparing years 6 and 7 in net sales there was a significant increase of 33%. Comparing years 7 and 8 there was then a decrease of 15% in net sales. Competition Bikes, Inc. states that this is due to the economic downturn and the fact that their main customer base of professional riders lost sponsorships thus less bike orders occurred. Although net sales did decrease from year 7 to 8, both of those years net sales were still significantly higher than year 6 indicating sales are trending upwards which is a strength. Competition Bikes, Inc. operating expenses have also changed over the three years. Comparing years 6 and 7 there was total increase of 23.9% and comparing years 7 and 8 a decrease of 3.6%. While it is a strength that Competition Bikes...
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...Hershey’s Company and Tootsie Roll Industries are both makers of confectionary products, mainly chocolate and other candies. Both companies have been making these products since the early to middle 1890’s and market their products worldwide. Hershey’s is the larger company of the two. To show perspective of how much larger Hershey’s is, they had a net sale of over 5 billion dollars in 2008. Tootsie Roll’s net sales in 2008 were $492 million. However, I will be looking at and comparing their financial data from 2002 to 2004 to each other and to the 2004 industry average. Accounting ratios I will be looking at include liquidity ratios, solvency ratios, and profitability ratios. Liquidity ratios show the ability of a company to pay back their short-term obligations. A few examples of these ratios are the current ratio, current cash debt coverage ratio, accounts receivable turnover ratio, average collection period, inventory turnover ratio, and days in inventory. Starting with the current ratio, I found that Hershey’s Co. did quite well in 2002 and 2003 but fell sharply in 2004. This was due to a large increase in liabilities in 2004 compared to the other years. The industry average for 2004 was .90 and their current ratio that year was .92 so they are just slightly above it. Tootsie Roll fared much better in all 3 years with its current ratio never going below 2.34. Companies with ratios over 2.0 are considered to be very stable in their short-term financial standing. Another good...
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...project analyzing of a publicly traded company. The publicly traded company which I picked to present is an online flower delivery company by the website well know as 1-800-Flowers.com. The company offers flower delivery from an online database which you can visit and place an order for all occasions and holidays. Since it’s an online platform, the company also sends flowers internationally with the help of their partnerships such as the local florists and flower growers in each country including the United States. The company also sells cards, chocolate and other accessories and gift items however they don’t produce any of it. 1-800-Flowers.com is simply an online store which you visit to order flowers and gifts and they have it delivered by working with the trusted different venders they have partnership with. Below is an example of the different category and average of the different percentage each category generates. This analysis will include the product/service profile. I will also share the financial analysis, providing three years of ratios, a horizontal analysis, and a vertical analysis. I will also be comparing the company to another company by the name of Flowers Foods Inc. which is within the same industry of flower delivery. Lastly, I will share my overall assessment of financial performance and why, or why not, I would invest my money into their 401-k/or invest in the company through other investment vehicles. ...
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...Comparing Net Present Value and Internal Rate of Return by Harold Bierman, Jr Executive Summary • • • Net present value (NPV) and internal rate of return (IRR) are two very practical discounted cash flow (DCF) calculations used for making capital budgeting decisions. NPV and IRR lead to the same decisions with investments that are independent. With mutually exclusive investments, the NPV method is easier to use and more reliable. Introduction To this point neither of the two discounted cash flow procedures for evaluating an investment is obviously incorrect. In many situations, the internal rate of return (IRR) procedure will lead to the same decision as the net present value (NPV) procedure, but there are also times when the IRR may lead to different decisions from those obtained by using the net present value procedure. When the two methods lead to different decisions, the net present value method tends to give better decisions. It is sometimes possible to use the IRR method in such a way that it gives the same results as the NPV method. For this to occur, it is necessary that the rate of discount at which it is appropriate to discount future cash proceeds be the same for all future years. If the appropriate rate of interest varies from year to year, then the two procedures may not give identical answers. It is easy to use the NPV method correctly. It is much more difficult to use the IRR method correctly. Accept or Reject Decisions Frequently, the investment decision...
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...Introduction In our project we have choose two companies that are engaged in cement manufacturing. They are i) Lafarge Surma Cement Ltd. and ii) Meghna Cement Mills Ltd. As per requirement, we have conducted ratio analysis and given interpretation. We chose Lafarge Cement Ltd as our main company and Meghna Cement Mills Ltd. as our benchmark company. Before telling the reasons behind this decision, we would like to give some brief information on these two companies. Brief review of Lafarge Surma Cement Ltd. Lafarge Surma Cement Ltd. (LSC) was incorporate on 11 November 1997 as a private limited company in Bangladesh under the company Act 1994 having its registered office in Dhaka. On 2003, Lafarge Surma Cement Ltd. was made into a public limited company. The company is listed in Dhaka and Chittagong stock exchange. Today, Lafarge Surma Cement Ltd has more than 11,000 shareholders having more than 58 million shares outstanding. The company contributes with some USD 50-60 million per annum worth of foreign currency savings for the country by supplying clinker to other cement producers in the market. The company also contributes BDT 1 billion per annum as govt. revenue to the national exchequer of Bangladesh. About 5,000 people depend on this company directly or indirectly for their livelihood. Brief Review of Meghna Cement Mills Ltd. Meghna Cement Mills Ltd. (MCM) was incorporate on March 1992 and started their production on January 1996. The company was listed in Dhaka Stock Exchange...
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...Ratio analysis does two things, immediately. The first thing is it allows the company to compare itself with other like companies. If management feels things aren't going well, they can help pinpoint the problem through comparing their ratios with other companies. They may have several ratios that are comparable, but a couple which are way off. That might be where the problem is. Also, ratio analysis may help by comparing your company with prior periods. If a particular ratio is declining when it would be better if it were staying the same or increasing, then again looking at the ratios are important to find out where the problem lies. Ratios are important to spot trends too They are calculated by dividing one statistic by another. For example one ratio use widely is PE--price to earnings. The price of the equity is divided by the earnings per share of the equity. That tells the relative price of an equity in relation to its earnings. Another is dividend %. That tells the amount of dividend divided by the price of the share of equity. Others commonly evaluated are gross margin; which is gross profit/sales, I think. Debt/equity which is debt of the company divided by equity or how leveraged the company is. ROI is another--profit divided by invested capital. This is a lot of information to take in but accounts receivable turnover ratio is a measure of the liquidity of a company's AR asset. Typically, the higher the turnover is, the more favorable it is. An interesting...
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