Company Financial Analysis: Ratio Analysis

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Ratio Analysis The purpose of this financial analysis is to identify several aspects of the company’s financing behavior. With this ratio analysis it is to know the degree of liquidity of the company from a management perspective, how they impact the firm’s ability to leverage new distinctive competences. The ratios that will be presented below are used in comparision to other companies in your industry and internal benchmarks. Profitability Ratios. These ratios come from your company’s income statement, measuring the profitability of the shareholder or company owner, having a higher value relative to a competitor's ratio or the same ratio from a previous period…show more content…
This means that the price could increase even though it may lead the company to a lower demand, this gross margin provides an indication that higher prices may be in order. -Net operating profit. Net Operating Profit covers all operating costs including indirect costs.. The business operating profit went down the last three years. This means Artic PLC is either spending on higher wages, primary material for its products or extra overheads. -Return on Equity (RoE) ROE measures the ability of a firm to generate profits from its shareholders investments in the company. ROE has been changing through the years, indicating that the company is growing 1.2 of profits in the first year but decreasing 0.2 in the last two years, however, it is not an absolute indicator of investment value. -ROCE: ROCE declined in the three last years, indicating that Artic PLC resources were not being used correctly in order to get better return on its capital. If Artict PLC borrows money they expect to have better profitability by next year, this did not happen in the last years exceeding the cost of debt and not returning enough…show more content…
this is a warning sign for this company, Artic PLC has to keep the number of the accounts receiveable as low as posible in order to collect cash from customers sooner that will lead the company to use that cash to pay debts and other financial obligations. Sales / Receivable = Net Sales Trade Receivables -Trade Payables: The change on the Payable days was not significant, increasing from 45 to 50 in 4 years. This demostrating that the company is managing their cash in order to have enough on hand to run their business and keep all the suppliers paid on time. Although, in 2014 there was a change of 2% and returned to 50 days in 2015, the payable days are still aceptable for this industry. Cost of Sales / Payables = Cost of sales Trade Payables Investment Ratios. -EPS: Artic PLC had to invest more from 2012 to 2014 to generate more income. By 2014 the company had more profits to distribute to its shareholders having as a result the decrease of the EPS on the last year, however in 2014 the company kept some of its profits and reduced its dividend to 17 cents per share because it must pay its

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