Thursday, February 21, 2019
Company Financial Analysis Essay
Emirates Computers make out Instructor Task Date Calculate the three (3) liquidity, five (5) mo scratchary leverage, six (6) turnover and four (4) sugarability ratios for both the stratums as per example 3. 5 in the PowerPoint presentations. Liquidity Current ratio= original assets/current liabilities 201029021/19483=1. 49 201124245/18960=1. 28 Quick ratio= (current assets- inventories)/current liabilities 2010 (29021-1301)/19483=1. 42 2011 (24245-1051)/18960=1. 22 Cash ratio= notes/current liabilities 201013913/19483=0. 71 201110635/18960=0. 6 Financial leverage Total debt ratio= ( substance assets- add up truth)/total assets 2010 (29021-7766)/29021=0. 73 2011 (24245-5641)/24245=0. 77 Debt equity ratio=total debt/total equity 2010 30833/7766=3. 97 2011 28011/5641=4. 97 Equity multiplier=total assets/total equity 201029021/7766=3. 74 201124245/5641=4. 29 Turnover Inventory turnover= personify of soundlys sold/inventory 201049128/1301=37. 76 201142789/1051=40. 71 Days sales inv entory=365/inventory 2010365/1301=0. 28 2011365/1051=0. 35 Receivables turnover=sales/account receivables 01061494/10136=6. 07 201152902/8543=6. 19 Days sales in receivables=365/receivables turn over 2010365/10136=0. 04 2011365/8543=0. 04 Total assets turn over=sales/total assets 201061494/38599=1. 59 201152902/33652=1. 57 Capital intensity=total assets/ sales 201038599/61494=0. 63 201133562/52902=0. 63 Profitability ratios Profit margin=net income/sales 20102635/61494=0. 04 20111433/52902=0. 09 transcend on assets=net income/total assets 20102635/38599=0. 31 20111433/33652=0. 04 Return on equity=net income/total equity 20102635/7766=0. 4 20111433/5641=0. 25 Emirates Computer products and work bring revenue from its sales. Revenues from January 2010 to January 2011 were rough 16% that is an emergence from the previous divisions. This was primarily because of the reco truly in the economy. A conjunctions economic health is critical because the products it sells are not primary products and and then people favor buying food than spending money to acquire a computer. This explains the reasons to why there was a decline in revenue for the yr 2009, which was about 13. % drop in comparison to the previous years. 2010 has reported an annex and this is cod to a dislodge in the strategies involved in the business. The revenue menses of the company has changed due to the solution and values that Emirates Computers has put in place. The service revenue has shown a tremendous increase over the years. There has been a gradual appreciation from 14. 3% of revenue in January to about 18. 7%of revenue in January 2011. There has been a do trustyable produce of 25% in 2010 and a growth of about 5% in the year 2009.The serving of revenue for the past three year has been due to cost of goods and services, which has shown a relative growth. Expenses like selling and administrative expenses and other expenses bemuse been constant for over three years. There was a n increase on nonphysical assets in improver to other costs. This is because of an increase on intangible assets from the Perot systems in 2010. The increase in facility action costs and severance was because of hitch of some facilities that manufacturers used in addition to using contract manufactures to cater cheaper services.The company has shown increase in values because of its stability in percentage revenues because the company has good management, which understands the business, and controls their costs. The company is well informed, they understand every dilate that may challenge it operation, and therefore they never encounter surprises that may negatively influence them. The company has registered an excellent net income in the year 2011 which showed an increase of over 80% from the years before. Return on assets is 2. 5 % and profit margin is 1. 6%, which come because of the increase in net income.Additionally the growth in the company has been because of higher rev enues and a good cost control. The change in the companys way of operation has led to the increase in net income. The services of operation of this company have increase as compared to the cost of manufacturing the product. The acquisition of the Perot systems led to the decrease in net income to 42. 2 % in 2010. Health wise the company has shown progress and therefore Emirates Computers has plans to keep expanding its services to a higher level, which will eventually friend the company (Peterson & Fabozzi, 2012).There has been an increase on the current assets as compared to previous year from 72% to 75% in the year 2011. The company has recognized all highly liquid investments such as credit cards from banks with a three month original maturities. These because there was increase in currency provided by operations while a decrease in cash in investment funds activities. The decrease in cash in investing activities is mainly because of lack of material they are important for acqu isitions in 2011 as compared to 2010. Generally, the company has portrayed a good fiscal year and their good health.It indicates an improvement in the ability to generate profits and income. The company has shown capability and potential in because all the three Profitability ratios that involve profit margin, return on assets and return on equity. The company has a pendant auditor who analyses the monetary recital of accounts of the company. Although at one point, the auditor gave an unentitled opinion concerning its financial statements. This is evident when analyzing the property plant equipment account, which is not very heavy in the balance sheet. The only representation is only 5. 1% assets own by Emirates Computers.Another aspect that the company has shown strength in is its Liquidity. The company current assets increased while its current liabilities and the current ratio and lovesome ration showed an increase from 1. 2% and 1. 22% in 2010 to 1. 49% and 1. 42%. Current liabilities on a dollar remained stable. Nevertheless, the increase in total assets, led to the decrease in current liabilities to 5. 8 %. All changes make Emirates Computers to be liquid and this gave it a boost and an advantage thus indicating good health. The companys equity of stakeholders increased to about 2 gazillion dollars (Fridson & Alvarez, 2011).This is because of the increase as are suit of earnings retained. In the year 2010 2011 return on equity (ROE) rose from 28. 8% to 39. 3% in 2011 while net income increased greater the stakeholders equity. Therefore, Emirates Computers makes profit with the stock determine variation because it does not pay dividends (Tracy, 2009). Conclusively, the purpose of Emirates Computers Company is mainly to equilibrise gains and losses that resulted from their exposure on contract. This reduces volatility of the earnings in addition to protecting the values of assets and liabilities.Emirates Computers carries out assessments in order to ensure effectiveness both at the beginning of hedge and at regular intervals in order to pinpoint out any ineffectiveness that might occur. book of facts Peterson, P. P. , & Fabozzi, F. J. (2012). Analysis of Financial Statements. Hoboken John Wiley & Sons. Tracy, J. A. (2009). How to read a financial report Wringing vital signs out of the numbers. Hoboken, N. J John Wiley & Sons. Fridson, M. S. , & Alvarez, F. (2011). Financial statement analysis A practitioners guide. Hoboken, N. J Wiley.