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Because the operating nature of each industry is different, the fixed asset turnover will vary significantly from industry to industry. Therefore, the most important uses for this ratio are to compare across firms in a single industry or the same firm over time. Agilecor's fluctuating sales have left it with a volatile fixed asset ratio. In 1999 it was 0.29; in 2000 it was 1.26; and in 2001 it was 0.1. This high degree of volatility indicates that the company's ability to generate revenues is almost entirely disassociated from its fixed asset level. However, this could indicate that the firm is in an industry with low fixed assets but highly volatile earnings streams (for example, real estate sales).
Total liabilities to total assets is an indicator of the firm's degree of leverage. For 2000, this was 0.27; for 2001 this was...
These figures indicate that Agilecor is increasing its leverage. Given, the company's erratic performance, it is not surprising that the degree of leverage is increasing -- debt can help stabilize a company with highly volatile income streams.
Operating margin measures the firm's total ability to drive profits from its revenues. Whereas gross margin mainly reflects pricing power and variable cost control, operating margin adds to this fixed and overhead cost control. In 1999, the operating margin for Agilecor was 3.3%; in 2000 it was 20.9%; in 2001 it was 3.1%. This indicates that the firm has generally a low but stable level of operating margin. The year 2000 may be considered to be an outlier, since the firm recorded substantially higher margins all round during that year. It is unusual for firms in most…
Fixed asset turnover is an indicator of how well the company utilizes its fixed asset base to generate revenue. Because the operating nature of each industry is different, the fixed asset turnover will vary significantly from industry to industry. Therefore, the most important uses for this ratio are to compare across firms in a single industry or the same firm over time. Agilecor's fluctuating sales have left it with a volatile fixed asset ratio. In 1999 it was 0.29; in 2000 it was 1.26; and in 2001 it was 0.1. This high degree of volatility indicates that the company's ability to generate revenues is almost entirely disassociated from its fixed asset level. However, this could indicate that the firm is in an industry with low fixed assets but highly volatile earnings streams (for example, real estate sales).
Total liabilities to total assets is an indicator of the firm's degree of leverage. For 2000, this was 0.27; for 2001 this was 0.67. These figures indicate that Agilecor is increasing its leverage. Given, the company's erratic performance, it is not surprising that the degree of leverage is increasing -- debt can help stabilize a company with highly volatile income streams.
Operating margin measures the firm's total ability to drive profits from its revenues. Whereas gross margin mainly reflects pricing power and variable cost control, operating margin adds to this fixed and overhead cost control. In 1999, the operating margin for Agilecor was 3.3%; in 2000 it was 20.9%; in 2001 it was 3.1%. This indicates that the firm has generally a low but stable level of operating margin. The year 2000 may be considered to be an outlier, since the firm recorded substantially higher margins all round during that year. It is unusual for firms in most industries to sustain operating margins at that level, so the other two years are likely the more reasonable normal level of operating margin at Agilecor.
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
Ratio Analysis a) The price-earnings ratio reflects two things -- the company's earnings and the market price. By no means is there a law that says one firm's P/E ratio should be in line with either the market or the competitors. First, an explanation of the earnings. The earnings component of the P/E is past-looking. The profit margin for HRG is fairly low -- 1.7% - reflecting that its earnings are
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
This ratio eliminates the stock figure from that of current assets and like the current ratio; it is used to measure the liquidity of a firm. The quick ratio may in some instances be preferred over the current ratio as it is inherently difficult to turn some assets into cash. In regard to the two companies, the quick ratio brings out Plume Inc. As being more risky as it
7% The company tangible assets consist of the plant, property, equipment such as the fleet of aircrafts that the company uses for its business operations. Other tangible assets include various building the company is using for business operations. The company tangible assets also include company computers, brand names and various computer software than the company is using to improve its business operations. However, the company intangible assets declined by 1.2% between
Accounting -- Financial Statement Analysis Comparison of gaming industry leader Ladbrokes PLC to William Hill PLC and then comparison of both those companies to the rest of the gaming industry reveals the burgeoning market of online/digital gaming. Comparison of the companies' histories, markets and ratios, shows a still-impressive industry titan Ladbrokes PLC being increasingly outgained by another market giant, William Hill PLC, and varying degrees of success among industry also-rans. It