In 2011 the current ratio was 1.86. By 2012, it decreased to 1.77 rating in the lower second quartile group in the industry. That said, Company G’s ability to repay its debt is consistent with showing a weakness from year to year based on the industry’s quartiles of 3.1 with a strong ability to cover liabilities 2.1 at the median to 1.4 stating a weakness. As such, this is an area of concern. 2.
The elimination of short-term debt shows that Home Depot, Incorporated is not using such debt to meet short-term cash requirements. The cause of the elimination of short term debt may be caused by the improved cash position and the economy. Home Depot, Incorporated’s financial position and ratios look good. In fiscal year 2008, the long-term debt-to-equity ratio was 54.4% compared to fiscal year 2007’s 64.3%. In fiscal year 2008, the return on invested capital of continuing operations was 9.5% compared to fiscal year 2007’s 13.9%.
The decreasing trend of this ratio is positive as it indicates a strengthening equity position. In 2008, Kroger’s debt-to equity ratio was 168.59 and in 2012 it was 211.05. In 2008, Safeway’s ratio was 81.04 and in 2012 it was 190.37. The debt to equity ratio of both Kroger and Safeway has an increasing trend, indicating weakening equity
There are many reasons why experts say that the U.S. is actually in a recession right now. A few reasons are that the GDP is slowing, Businesses are expanding more slowly, Employment is falling, and housing prices are down by 10 percent and the stock market crash and subsequent economic downturn in 2000. With this happen it was not a recession in technical terms because the GDP growth was negative in the Q3 2000, Q1 2001, and Q3 2001, not of which were consecutive. But anyone that lived through it knows that it felt like a recession during all that time. In face, the GDP growth did not reach 3 percent or over unit Q3 2003.
Although the bonds have the lowest cost of issuance among the choices, its Net Present Value (NPV) of $219 million is lower than the HUD 242. The Business Dictionary defines NPV as “the difference between the present value of the future cash flows from an investment and the amount of investment” (Business Dictionary, p. 1, 2012). The collateral requirement for the bonds is also much higher than the HUD 242. Because the collateral includes escrow on ECH’s gross receivables, ECH possibly may have less control over its future revenue stream. The simulator also took note of the four-year time frame of the expansion project versus the three-year spending limit on the bonds.
Cost of Goods Sold increased from year 6 to year 7 by $1,048,000.00, or 31.80%. This is normal when sales increase and it is positive that the percentage is lower than sales. From year 7 to 8 Cost of goods sold decreased by $630,400.00 or -14.5% from 7 to 8. This reflects the reduction in sales. It is good that the percentage decrease was lower than sales decrease.
Under Armour’s financial leverage ratio (4.7%) is lower because it utilizes less debt in its capital structure and it is not earning as high on its assets, compared to Nike, Inc. (7%). Component Percentage Analysis of the Income Statements | Component Percentages | | Under Armour | Nike, Inc. | | In thousands | In millions | Income Statement | 2012 | Percent | 2012 | Percent | Net Sales | $1,834,921 | 100.0% | $24,128 | 100.0% | Cost of Goods Sold |
3. Slight increase in Current Assets comprised of Cash & Cash equivalents from 2006 however still very low. Very Poor Liquidity Solvency 1. Concerns for such a high Debt. Ratio.
The author of this article, Jeannine Aversa, is stating that key economic indicators point to the likelihood of a recession. Aversa supports her thoughts by noting the real GDP; “crawled at a 1.3 percent pace in the opening quarter of 2007…even weaker than the sluggish 2.5 percent rate in the closing quarter of last year.” The author suggests the main cause of the economic slowdown is due to “the housing slump.” Consumer expenditures are driving the economy, but Aversa worries about a “fallout from risky mortgages and rising energy prices.” Uncertainty of the Feds actions concerning the interest rates is leading to lower investment spending. The author also states that the Feds decision on raising or lowering the interest is due to the
CFO is larger than net income each year due to the noncash charges of depreciation and amortization. In 2008, net income is negative, but CFO is still positive as $1,879 million due to the one time goodwill impairment charges. Inventory has decreased from 2006 to 2008, after its acquisition of May in 2005. Receivables also decreased each year, which maybe a sign that the company’s receivable quality has improved. Macy’s decreased its purchase of inventory and property and equipment and decrease disposition of property and equipment year by year.