...Industry Analysis 3. Financial Analysis - Profitability & Growth Analysis - Cash Flow & Cash Uses - Liquidity & Solvency 4. Outlook & Investment Recommendation 1. COMPANY ANALYSIS Amazon has continually been growing; although the company suffered from a $ -241 M net loss at $ 89 B revenue in 2014. Analysis based on latest audited data FY 2014 by EY. REVENUE & NET INCOME Revenues of $ 89 B with a net loss of $ -241 M in 2014 HISTORY Jeffrey Bezos launched Amazon.com in July 1995 SOURCES OF REVENUE Products (online retail with 79% / $ 70,080 M) and services (= 21% / $ 18,908 M) compuDng services, consumer electronics, digital content & adverDsing services DIVERSIFICATION Constant efforts to diversify by acquiring companies/start-ups and supported by high investments in R&D (e.g. IntegraDng the value chain by creaDng digital content provided online) CORPORATE STRATEGY Amazon at a glance ROE BREAKDOWN ROE -2.35% = NI Assets -241 47,332 -1% X Assets Equity 47,332 10,244 Main focus on strong growth above market average to gain market share rapidly since the company’s foundaDon. Focus on expansion esp. in Europe in 2016 (Example: + 2,500 employees, +3 R&D centers and + 10 warehouses in U.K.) 462.07% ESADE MBA - Class of 2017 - Section A - Group 8 3 1. Company Introduction 2. Industry Analysis 3. Financial Analysis - Profitability & Growth Analysis - Cash...
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... BY: Feng Xiao Ma Xiaoxuan Shi Ruohan Table of contents Executive Summary………………………………………………………………………………. 3 1. Introduction ……………………………………………………………………….. 3 2. Ratio Analysis……………………………………………………………………… 4 2.1 Short-term Solvency Ratio ……………………………………………….. 4 i. Current Ratio……………………………………………………………… 5 ii. Quick Ratio……………………………………………………………….. 6 2.2 Profitability Ratio…………………………………………………………… 6 i. Net profit margin………………………………………………………….. 6 ii. Gross profit margin………………………………………………………. 7 iii. Assets turnover…………………………………………………………… 8 iv. Turn on assets……………………………………………………………. 8 v. Return on ordinary shareholders’ equity…………………………………9 vi. Earning per share…………………………………………………………10 2.3 Efficiency Ratio……………………………………………………………….10 i. Debtors’ turnover…………………………………………………………...10 ii. Average days’ sale uncollected……………………………………………11 iii. Inventory turnover……………………………………………………….....11 iv. Inventory turnover in days………………………………………………. 12 2.4 Long-term Solvency Ratio…………………………………………………. 13 i. Debt to equity……………………………………………………………… 13 ii. Debt to Assets…………………………………………………………….. 14 iii. Leverage Ratio…………………………………………………………… 14 iv. Interest coverage………………………………………………………….15 3. Conclusion…………………………………………………………………………. 15 4...
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...Table of Contents Introduction – Beacon Lighting Corporation Pty Ltd………………………………………..6 PROFITABILITY & RETURN Gross profit margin …………………………………………………………………………..7 Net profit margin ……………………………………………………………………………..8 EFFICIENCY Debtor days ratio ........................................................................................................................9 Creditor days ratio........................................................................................................................9 SHORT-TERM SOLVENCY & LIQUIDITY Current ratio ...................................................................................................................………..10 Quick or acid test ratio .........................................................................................................……11 LONG TERM SOLVENCY & STABILITY Debt to equity ratio ..........................................................................................................………12 Debt to assets ratio ......................................................................................................... ...…......13 MARKET BASED Price/ Earnings (P/E)................................................................................................................... 14 Earnings Yield............................................................................................................................. 14 Conclusion ..........................................................
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...DEFINITION OF 'SOLVENCY RATIO'A key metric used to measure an enterprise’s ability to meet its debt and other obligations. The solvency ratio indicates whether a company’s cash flow is sufficient to meet its short-term and long-term liabilities. The lower a company's solvency ratio, the greater the probability that it will default on its debt obligations. The measure is usually calculated as follows: Solvency ratio, with regard to an insurance company, means the size of its capital relative to the premiums written, and measures the risk an insurer faces of claims it cannot cover. The solvency ratio is only one of the metrics used to determine whether a company can stay solvent. Other solvency ratios include debt to equity, total debt to total assets, and interest coverage ratios. However, the solvency ratio is a comprehensive measure of solvency, as it measures cash flow – rather than net income – by including depreciation to assess a company’s capacity to stay afloat. It measures this cash flow capacity in relation to all liabilities, rather than only debt. Apart from debt and borrowings, other liabilities include short-term ones such as accounts payable and long-term ones such as capital lease and pension plan obligations. Measuring cash flow rather than net income is a better determinant of solvency, especially for companies that incur large amounts of depreciation for their assets but have low levels of actual profitability. Similarly, assessing a company’s ability...
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...A Comparative Analysis Of The Effectiveness Of Three Solvency Management Models By Enyi, Patrick Enyi Ph.D, MBA, B.Sc, ACA, ACCA, MFP, RFS. Fellow, American Academy of Financial Management (AAFM) Member, American Accounting Association (AAA) Head, Department of Accounting, Covenant University, Ota, Nigeria A Comparative Analysis Of The Effectiveness Of Three Solvency Management Models Abstract The introduction of the Altman’s Z-score model in 1983 and much recently the Enyi’s Relative Solvency Ratio model in 2005 has divergently provided financial analysts with alternative methods of analyzing corporate solvency which hitherto was exclusively done using the traditional historical record based ratio analysis, with particular reference to the current ratio. To test the relevance and effectiveness of the three models, real life performance data were extracted from the annual reports of 7 quoted companies, analyzed using the three models and the results compared to show the strengths and weaknesses of each. The result revealed that the current ratio and the Z-score models suffer from many limitations including imprecision while the Relative Solvency Ratio combines the capability of an effective indicator with the precision required of a true predictor. Keywords: Solvency, Liquidity, Ratio Analysis, Bankruptcy, Performance, Relative Solvency, Working Capital, Current Ratio, Current Assets, Balance Sheet 1. Introduction It is a proven fact over and throughout...
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...Expected Returns * Trailing P/E Ration * Forwarding P/E Ratio * Dividends Per Share * PEG Ratio * Market Capitalization * Growth in Revenues for the Last 12 Months Risk Measurements * Beta β * Standard Deviation * Sharpe Ratio * Treynor’s Reward to Volatility Ratio Highlights Qualitative Analysis Company Profile Industry Overview SWOT Analysis * Strengths * Weaknesses * Opportunities * Threats Porter’s 5 Competitive Forces I. The threat of substitute products II. The threat of new competitors III. The intensity of competitive rivalry IV. The bargaining power of customers V. The bargaining power of suppliers Management Financial Statement Analysis Financial Ratio Analysis The financial ratios in this report has been computed by using the income statements of Pfizer (PFE) during the fiscal year 2012. The income statements were obtained from the annual report submitted to the Security and Exchange Commission (SEC) website. This report will include the following ratios: Short-term solvency ratios, long-term solvency ratios, turnover ratios, profitability ratios, and market value ratios. These ratios will serve as a guide in determining the company’s position as it relates to performance for the present, and its performance as...
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...Huffman Trucking Ratio Analysis Memo ACC/291 June 28, 2012 James Haynes Ratio Analysis Memo Starting in 1936, in Cleveland, Ohio, K. Huffman founded Huffman Trucking. “The growth of the company was the direct result of World War II and the increased demand for carrier services between factories in the Midwest to ports on the East Coast.” As of today, Huffman Trucking has transitioned from a single tractor trailer to 925 drivers and 800 tractors, and continues to provide the same delivery service across the nation. Our financial analysis team has looked over financial statements to determine the liquidity, profitability, and solvency ratios of Huffman Trucking. These ratios provide detailed information to creditors, investors, and employees. Together, the ratios reveal data related to the performance and position of Huffman Trucking. What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company? The liquidity ratio of a company shows the way the company is able to pay back short-term debt that is owed. Creditors would be interested in this type of ratio. The profitability ratios are the profit performance that makes up the financial success of the company. Profitability ratios would be beneficial to individuals outside of the company such as investors and creditors. Solvency ratios are the ability of the company to pay off the long term debt. The company’s solvency ratios are of interest to long-term creditors and the company’s’...
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...Analyzing AsiaCell Financial Statements Financial Statements Analysis 1/17/2016 Prepared by: Azhy Azad Ahmed Ari Sherzad Zamo Zana Mohammed Omed Contents Introduction 3 Financial statements of AsiaCell Company 4 Financial statements Differences: 6 Definitions: 7 Liquidity Ratios: 7 Solvency Ratios: 7 Profitability Ratios: 7 AsiaCell Ratio Analysis 8 Liquidity Ratios: 8 Solvency Ratios: 12 Profitability Ratios: 14 Conclusion: 18 Introduction We are analyzing the financial position of AsiaCell Company during the years (2011, 2012, and 2013); the financial statements are provided on Iraqi Exchange and commission website (www.isx.iq). It is important that you fully understand the data presented here. Please be aware that the analysis presented is not a prediction of the future but rather a tool for monitoring the progress of AsiaCell business over time. This information should factor into your decision making, but it should certainly not be the only factor in your business decisions. Be sure to consult all appropriate resources and professionals before making any decisions that may affect the financial health of AsiaCell Company. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. Financial statements of AsiaCell Company Financial statements Differences: There many differences...
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...submitting, or causing the attached assignment to be submitted, to AIB, I have not plagiarised any other person’s work in this assignment and except where appropriately acknowledged, this assignment is my own work, has been expressed in my own words, and has not previously been submitted for assessment. | ASSESSMENT SHEET(to be completed by the examiner) | Student name: | | | | Course name: | | | | Subject name: | | | | Assessor/marker: | | | | COMMENTS | Principles learnt (for example, number and understanding of principles referred to, their influence on the structure of this paper, number and correct citations of references, use of appropriate jargon) | | /4 | | | Application of principles. That is, the analysis and evaluation of the example problem based on the principles, including the final recommendations and their justification | | | /8 | | | How well the example problem was described, including the extent and depth of information (including the data) about it that was accessed | | | /4 | | | Structure and presentation | | | /2 | | | Style, grammar and language | | | /2 | | | Total | | Less penalties | | GRAND TOTAL | /20 | General comments | | | | FOR MODERATOR’S USE ONLY | I agree with the assessor’s assessment I disagree with the assessor’s assessment and the new mark is as follows for the following reasons: | /20 | |...
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...Financial Statement Analysis Financial Statement Analysis 39 Common‐Size Financial Statements • Balance sheet items as a percentage of ______________________. Income statement items as a percentage of ______________________. • 40 Suzie Q Corporation Balance Sheet December 31, 2011 Assets: Current Assets: Cash Accounts Rec. Inventory Total CA Fixed Assets: Net Fixed Assets Total Assets Liabilities & Equity: Current Liabilities: 12.5% Accts. Payable 21.9% Notes Payable Total CL 24.2% 58.6% Long‐term Debt: Common Stock 41.4% Retained Earnings 100.0% Total Liab. & S.E. $ 80 140 155 $375 265 $640 $ 95 110 $205 120 40 275 $640 14.8% 17.2% 32.0% 18.8% 6.2% 43.0% 100.0% 41 FINC 3610 ‐ Yost Financial Statement Analysis Suzie Q Corporation Income Statement For Year Ended December 31, 2011 Sales Cost of Goods Sold SG&A Expenses Depreciation EBIT Interest Expense EBT Taxes Net Income $910 470 210 60 $170 40 $130 52 $78 100.0% 51.6% 23.1% 6.6% 18.7% 4.4% 14.3% 5.7% 8.6% 42 Classification of Financial Ratios • • Short‐term Solvency or Liquidity Ratios Long‐term Solvency or Financial Leverage Ratios Asset Management or Turnover Ratios Profitability Ratios Market Value Ratios 43 • • • Short‐term Solvency (Liquidity) Ratios • Current Ratio • Quick (Acid‐Test) Ratio • Cash Ratio • Net Working Capital to Total Assets • Interval Measure 44 FINC 3610 ‐ Yost Financial Statement Analysis Long‐term Solvency (Financial Leverage) Ratios ...
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...Solvency Solvency is net after tax profit plus depreciation divided by short and long term liabilities. Harley Davidson had a better year in 2012 at 108% than 2013 at 48%. In 2012 Harley Davidson had $623,925 in net after tax and $168,978 in deprecation. The total long term and short term liabilities were $732,105. In 2013 Harley had $733,993 in net after tax and $167,072 in deprecation. The total long term and short term liabilities for 2013 were $1,176,140. Harley Davidson time-interest-earned ratio was better in 2013. 2013 Tax expenses: $380,312 Net Income: $733,993 Interest expenses: $165,491 Ratio: 257% 2012 Tax expenses: $337,587 Net Income: $623,925 Interest expenses: $195,990 Ratio: 196% This was calculated by “the sum up the net income of the company, tax expense, and interest expense altogether, and then divides this sum by the interest-expense. This shows the company’s capability to meet up interest payments when due” (analysis). Free cash Flow 2013 Capital expenditures: $208,321 Cash dividends: $187,688 Cash operations: $997,093 Free Cash Flow: $601,084 2012 Capital expenditures: $189,002 Cash dividends: $141,681 Cash operations: $801,458 Free cash Flow: $470,775 This was calculated by subtracting “the capital expenditures and cash dividends from cash from operations. This is the method of determining the amount of free cash flow of the company” (analysis). “Free cash flow is a quantification of the amount of cash possessed by a company...
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...1.Comparative Analysis To make a comprehensive and precise comparison, other than EA., we select Singapore Airlines Limited which is one of the most significant competitors in the world. All of our analysis is based on data which are drawn from Bloom Business and other authoritative websites, which contain 2 companies’ financial reports 2010-2012 including balance sheet and income statement. By comparing Emirates and Singapore Airlines we can make a brief conclusion of the EA’s financial situation. 1.1 Profitability Profitability is showed by the firm’s amount and level of income, and it can indicate the increase value of capital. 1.1.1 Net Profit Margin Net profit margin indicates how well the company converts sales into profits after all expenses are subtracted out. We can see from the chart that EA’s net profit margin was dramatically low in 2012,which is due to the increasing operating costs（mainly include the shooting up of Crude Oil price). However, it's profit margin is a little higher than the competitor because of its geographical advantage. 1.1.2 Return On Asset The higher the return on assets ratio, the more efficiently the company issuing its asset base to generate airline services. So EA’s efficiency of asset used is decreasing sharply in 2012. However, EA has higher efficiency than its competitor. 1.1.3 Return on shareholders funds ROSF allows investors to see how effectively the money they invested...
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...Financial Analysis of Wesfarmers Limited 2011 Annual Report SUBMISSION DATE: STUDENT NAME: STUDENT ID: EXECUTIVE SUMMARY This report provides the financial analysis and evaluation of Wesfarmers Limited’s 2010 and 2011 fiscal year. The analysis of Wesfarmers performance is based on the 2011 Annual Report. To determine the financial standing of the company at the end of the year, data obtained from their Income Statement, Balance Sheet and Cash Flow Statement, the financial analysis ratios: Liquidity ratios, efficiency ratios, profitability ratios, financing ratios, and market-based investments and other ratios, are all calculated. A comparison of these ratios reveals that Wesfarmers Limited is a company with a stable financial system, capable of overcoming different unavoidable circumstances, and has a goodwill that enables them to gain the trust of shareholders and the market. This is an indication of why Wesfarmers has been able to build a stable business with efficient performance, and a significant assets portfolio from the value end of retail to its involvement in the resource sector. Wesfarmers is capable of establishing new businesses and working efficiently with the changing business and natural environment. TABLE OF CONTENTS EXECUTIVE SUMMARY ii A. LIST OF TABLES iv INTRODUCTION 1 RATIOS 2 EVALUATION 3 1.0 Short-Term Solvency or Liquidity Ratios 3 2.0 Efficiency Ratios 3 3.0 Profitability Ratios 4 4.0 Financing Ratios or Long-Term Solvency 4 5.0 Market-Based...
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...calculated on balance various situations magnitudes a company, the income statement, action or market traded at a given time, so that the information we provide is something like a snapshot. Financial ratios are classified as liquidity ratios, debt and solvency ratios, profitability ratios, management or operational ratios. Liquidity Analysis: Through of these ratios such a level of financial solvency shown short term the company is said to have a capacity to deal with these short-term obligations that trigger the production methods. In other words we can say that is the ability to have an organization to raise money to get liquid cash to fund its normal operation. Management Analysis or activity: Measure the effectiveness and efficiency of management, in the management of working capital, expressed the effects of decisions and policies followed by the company regarding the use of their funds. They show how the company handled regarding collections, cash sales, inventory and total sales. Solvency analysis, debt and leverage: These ratios in this group can be seen entirely by resources obtained from third in the business. Also it shows the support that the company has in relation to its total liabilities. Profitability Analysis: Measure the utility generating capacity by the company. Their purpose is to assess the net result from certain decisions and policies in the administration of the funds of the company. Evaluate the economic performance of the business. Express the performance...
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...The Use of Ratio Analysis Ratio analysis is a tool used by individuals to conduct a quantitative analysis of information in a company's financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis to judge the performance of the company. Analyzing ratios is used to evaluate a company's present performance and its possible future performance. In a fact, interpretation of different accounting ratio lets the researcher fully understand the financial condition and performance of a business concern. Ratio itself is the comparison of one figure to another relevant figure. (http://www.investopedia.com/terms/r/ratioanalysis.asp) There are many ratios that you can use to analyze the financial health of a business. In this paper I will discuss four financial performance areas that I think are worth analyzing: Liquidity, profitability, solvency, and efficiency. I will discuss the strengths and weaknesses of using these ratios. First of all, Liquidity is the ability of the firm to convert assets into cash. It is also called marketability or short-term solvency. The liquidity of a business firm is usually of particular interest to its short-term creditors since the liquidity of the firm measures its ability to pay those creditors. Several financial ratios measure the liquidity...
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