¶ … Borders Group The company's income was reasonably steady for 2007 and 2008, but dropped in 2009. This is not surprising -- most companies saw revenue declines in 2009, as this was the depth of the recession. However, Borders was not in a great financial position in 2007, so the decline in revenue in 2009 has only put it more at risk.
Day's Sales in Inventory
ROA and ROE are n/a because there were no returns, as the company recorded a net loss for the year.
The results above illustrate that Borders has not had a good couple of years. The company is losing money, and this is reflected in the loss per share, and the lack of returns on assets and equity. The gross margin seems adequate to deliver profit, but it has decreased in the past year. The net margin, however, has been negative in both years, because the company has posted losses Borders has a lot of debt, with a high debt ratio, and low operating cash flow to debt ratio. While its immediately liquidity is not an issue in terms of its current ratio, a major point of concern for the company is how little cash it has. Borders has a low cash ratio, and a lot of inventory on the books. The inventory turnover is not particularly good for a company that may face a cash crunch at some point in the near future. So while Borders is not in immediate jeopardy, the company is not ...
g. Despite the revenue problems, Borders is generating more cash from operations over the past couple of years, in part because it has worked to lower its inventory levels, and lower its payables. The company has taken other steps to ensure its financial health -- lowering capital expenditures, selling off surplus assets and paying down its debts. All of these steps serve to improve the cash position of the company in the face of declining revenues.
h. The company has little margin for error despite its moves. The ROA is a deceptive measure and should not be used here --…
The company's income was reasonably steady for 2007 and 2008, but dropped in 2009. This is not surprising -- most companies saw revenue declines in 2009, as this was the depth of the recession. However, Borders was not in a great financial position in 2007, so the decline in revenue in 2009 has only put it more at risk.
Financial Statement Differentiation Analysis of the Use of Four Types of Financial Statements The four fundamental types of financial statements include the balance sheet, income statement, statement of retained earnings and statement of cash flows and each meets a very specific series of needs within a business. Investors are most interested in the risk profiles of companies they are interested in investing in more than any other information element. Creditors are most
The data must be absolutely correct. 3. Effects of Price Level Changes: Price levels changes often make the comparison of figures difficult over a period of time. Changes in price affect the cost of production, sales and also the value of the assets. Therefore, it is necessary to make proper adjustment for price-level changes before any comparison. 4. Quality factors are ignored: Ratio analysis is a technique of quantitative analysis and
The ratios are symptoms rather than problems. Thus, we see the emergence of ratios as a diagnosis tool rather (Johnson, 2008). These tools must then be used in concert with more in-depth analysis techniques and the collect and interpretation of other information. Ratio analysis alone will yield little and the prevailing thought today supports finding better ways to integrate ratio analysis within the context of overall understanding of a
Ratio and Financial Analysis of Computron Ratio analysis is the overall numerical values of an organization collected from income statements and balance sheets of a company to evaluate its financial performances. Investors, creditors, and potential shareholders used the ratios to evaluate the financial performances and financial health of a company. The management can also use the ratios to analyze the organizational performances. Profitability ratio, current ratios and efficiency ratios are the
Ratio Analysis The Balance Sheet and the Statement of Income are essential, but they are only the starting point for successful financial management. Apply Ratio Analysis to Financial Statements to analyze the success, failure, and progress of your business. Ratio Analysis enables the business owner/manager to spot trends in a business and to compare its performance and condition with the average performance of similar businesses in the same industry. To do this
Starbucks Ratio Analysis The relevance of ratio analysis cannot be overstated in seeking to assess the financial viability of an enterprise. As Porter and Norton (2012) point out, ratio analysis is one of the most important “techniques used by investors, creditors, and analysts in making informed decisions” (p. 698). Starbucks Corporation remains one of America’s foremost coffee marketers and retailers. In addition to sourcing, roasting, as well as selling coffee, the