Assessing A Company Future Financial Health

848 words - 4 pages

Assessing a Company’s Future Financial Health

In this case the concentration is on “Company Performance Measurement”, using the “Ratios”, ‎before we answer to the question, we have to focus a bit on the “Financial Ratios”‎
Sales Growth: The increase in sales over a specific period of time, often calculated ‎annually.‎
In this specific Case, that has asked the Sale growth for the four-year period, can be calculated ‎as bellow;‎
‎ ((Ending Value)/(Beginning Value) )^((1/(# of Year)) )-1 ‎
‎= ($244,000/$115,000) = (1+r) ^4 compound rate, = 21%‎
Profitability Ratios: it shows how profitable the Company is;‎
Profits as a percentage of sales in 2008;‎
Income/Sale = 14000/244000=0.0573*100=5.73%‎
Profits as a percentage of sales in 2005;‎
Income/(Sale )= 5000/147000‎‏ = ‏‎0.0340 *100 =3.4%‎
This shows an increase of 2.3% from the beginning (2005).‎
‎ 3. SciTronics had a total of $112, 000 (75,000+20,000+7,000+10,000) of capital at year-end 2008 and ‎earned before interest but after taxes (EBIAT) 16,000 (26,000-10,000) during 2008. Its return on capital ‎was 14.29% (16,000/112,000) which represents an increase from the 8.11% (6,000/74,000) in 2005.‎

‎ 4. SciTronics had $75,000 of owner’s equity and earned $14,000 after taxes in 2008. Its return on ‎equity was 18.66% ($75,000/$14,000) an improvement from the 8.1% ($5,000/$61,000) earned in 2005.‎

Activity Ratios
‎ 1. Total Assets turnover for SciTronics in 2008 can be calculated by dividing $244,000 (net sales) into ‎‎$159,000 (total assets). The‎
turnover decreased from 1.58 times in 2005 to 1.53 in 2008.‎

‎ 2. SciTronics had $66,000 in accounts receivables at year end 2008. Its average sales per day were ‎‎$668.49 ($244,000/365) during 2008 and its average collection period was 98.73 ($66,000/668.49). This ‎represents an improvement from the average collection period of104.29 ($42,000/402.73) days in 2005.‎

‎ 3. SciTronics apparently needed $29,000 (inventories in 2008) of inventory at year end to support its ‎operations during 2008. Its activity during 2008 as measured by the cost of goods sold was $74,000 ‎‎(COGS). It therefore had an inventory of turnover of 2.55 (74,000/29,000) times. This represents an ‎improvement from 2.04 (43,000/21,000) times in 2005.‎

‎ 4. SciTronics had net fix assets of $18,000 (net fix assets) and sales of $244,000 in 2008. Its fixed asset ‎turnover ratio in 2008 was 13.56 (244,000/18,000), a deterioration from 16.33 (147,000/9,000) in 2005.‎

Leverage Ratios: How Soundly Is the Company Financed?‎

‎ 1. SciTronics’ ratio of total assets divided by owners’ equity increased from 1.52 (93,000/61,000) at ‎year end 2005 to 2.12 (159,000/75,000) at year-end 2008.‎
‎ 2. At year-end 2008, SciTronics’ total liabilities were of its
total assets was 52.83% (48,000+7000+20000+9000/159000), which compares with 34.4% ‎‎(21,000+11,000)/93,000).‎

‎ 3. The market value of SciTronics equity was $175,000,000 at December 31, 2008....

Find Another Essay On Assessing a Company Future Financial Health

Gillette Financial Analysis This assignment was intended to solicit a complete financial analysis of a publicly traded company in the U.S. for the fiscal year ending 2003.

1728 words - 7 pages Company DescriptionThe Gillette Company operates in many locations around the world to deliver services from any of their five business segments: razors, toiletries, batteries, oral care, and Braun. Gillette's razor division products are MACH3, Sensor, SensorExcel, Trac II, Atra, and Good News. The toiletries division is made up of Gillette Series, Adorn, Right Guard, Soft and...

A Troubled Future for America: Health Care and Social Security Reform

1087 words - 4 pages An analysis of a book entitled The Radical Center by Ted Halstead and

"Without adopting the marketing concept a company cannot possibly hope to develop future plans". Discuss this statement from the point of view of a manufacturer of capital goods.

1531 words - 6 pages INTRODUCTIONWhat is the marketing concept? And what are capital goods? The answers to these two questions must first be determined in order to accurately discuss this statement.Capital goods are products that are made to be used in the production...

Chocolate May Have a Future in the Health Food Aisle

607 words - 2 pages Before you reach for that chocolate heart for your Valentine this year, consider the findings of Andrew McShea and team, found in Nutrition Reviews. When it comes to chocolate, most of us will agree that it has more of a positive effect on our waistlines than our health. But McShea’s article, entitled “Clinical benefit and preservation of flavonols in dark chocolate manufacturing,” shows us a different side of the sweet treat, by pointing out the...

How to Build Trust and Gain Business in 180 Days as a Financial Advisor; basically a biased paper outlining what you would do/say if a financial services company asked the above subject heading.

634 words - 3 pages How to Build Trust and Gain Business in 180 DaysA big portion of being a financial advisor is sales, whereby acquiring business is a contact sport and prospecting for new clients is the name of the game. From what I've gathered in terms of outside observations, as well as inside information, finding potential customers is without a doubt the most...

The Importance of Fiscal Health Knowledge

1255 words - 5 pages Financial data can highlight the strengths of an organization, as well as magnify potential areas of concerns. Analysis of financial statement allows for the understanding of a company’s past performance, and the ability to make educated assumptions about their future performance (De Mello-e-Souza & Awasthi, 2009). This is especially important when non-profit organization establish business relationships with for-profit companies. In the public...

The Purpose of Financial Statements

1835 words - 7 pages The Purpose of Financial Statements The financial statements of a business are used to provide information about the status of the business, set performance targets and impose restrictions on the managers of the firm as well as provide an easier method for financial planning. The financial statements consist of the Profit and Loss Account, Balance Sheet and the Cash Flow Statement. There are four...

Financial Statement and Ratio Analysis: Key Tools to Successful Financial Management

2633 words - 11 pages Financial Statement and Ratio Analysis: Key Tools to Successful Financial Management Executive SummaryHow do firms assess their own strengths and weaknesses? How does a firm measure management's performance? Finally, how do firms compare themselves against the competition? The answer to these questions lies in the fundamentals of financial management. A crucial element in the...

What Are Actuaries?

865 words - 3 pages "˜An Actuary is someone who expects everyone to be dead on time' (Jerry Tuttle FCAS) The answer to the question, "What is an actuary", is not as simple as the answer to the question "What is a dog" or "What is a lawyer". The work of an actuary is not as straightforward as you may think. We are not simply "˜Well paid accountants' or "˜number...

Gap Analysis: Lester Electronics

2358 words - 9 pages Running head: GAP ANALYSIS: LESTER ELECTRONICSGap Analysis: Lester ElectronicsKatrina BaileyUniversity of PhoenixGap Analysis: Lester ElectronicsLester Electronics, Inc, (LEI) is a publicly traded manufacturing company founded in 1978, as the result of an exclusive United States distribution contract with Shang-wa Electronics (SE). With the addition of several...

Accounting: Managerial and Financial

915 words - 4 pages Managerial and financial accounting are two very different types of accounting. They differ so much, that many schools offer separate classes on both. The uses and users of both types of accounting vary as much as the information provided by each. In this paper, the differences between managerial and financial accounting will be discussed. The users and decisions that are able to be made with both will also be discussed.

Similar Essays

Analyzing A Company's Financial Health Essay

1959 words - 8 pages Financial accounting develops account information that is used by external parties such as stockholders, suppliers, banks, and government regulatory agencies in their decision-making. Management accounting develops confidential accounting information that is used by managers within an organization. Management accounting is a complex process of identifying, accumulating and analyzing information and then communicating this information to...

Evaluation Of The Financial Performance Of A Chemical Company

3448 words - 14 pages Evaluation of the Financial Performance of a Chemical Company The Lee Chew Cheng Wong Chemical Company produces high quality speciality chemicals, and it exports around 85% of its output to many countries and regions. Since the establishment in the mid 1980 this company has emphasized the shareholder value. To keep this focus, a new Chief Executive Lee Shan Loke Teo has proposed a lot of new policies. This assignment evaluates the financial...

A Current And Future Perspective Of The Dublin Shirt Company

1961 words - 8 pages The Dublin Shirt Company: A Current and Future PerspectiveTable of ContentsExecutive...

Paper For My Health Class Assessing The Use Of Medical Marijuana. I Received An A On This Paper. My Sources Are Listed At The End.

1425 words - 6 pages Medical Uses Of MarijuanaMarijuana, a drug we see as completely shunned by society. Although it may receive a bad reputation because of media coverage, it has its benefits as well as downfalls. Science will never be proven, but people should be aware of what science is discovering about medicinal marijuana. It is best to be informed about what marijuana...