Opening office in Miami is considered as not effective decision. The main aim of opening office is promote sales. In 2008 sale increase for 11.2% at the same time net income decrease for 49.7, that proves that sales promotion will have bad influence to financial data. In 2008 we observe sharp growth of cost of goods sold for 13.48 % that is faster than sales growth. Also for several years new office will not bring any profit only expenses growth that is also a reason of potential net profit reduction.
1. CashFlowStatementsfor 2008
Note that the $22220 net increase in retained earnings is separated between the 44220 net income for the year and the 22000 cash dividends (dividents per share0,22* number of issued shares100000) for the year:
increase in cash during year = cash flow from operating activities+ cash flow from investing activities+ cash flow from financing activities
inventory turnover= 2007 year: inventory turnover=3432000715200=4,82008year: inventory turnover =3850000836000=4,6inventory turnover decreased in 2008 for 4.1 % and less than industrial average for 1.6.c) debt2008 year: debt ratio=540200+4246121650800=0,58 or 58%2007year: debt ratio= 481600+3234321468800=0,55 or 55%Debt ratio in 2008 has increase for 5.4 % and is higher than industry average. Total debt ratio should be 1 or less.d) profitabilitynet profit margin = Net Income After Taxes ÷ Sals2008year: net profit margin = 442203850000=0.011 or 1.1 %2007 year: net profit margin = 879603432000=0.025 or 2.5%Net profit margin decrease in 2008 for 1.4% and is below than industry average for 3 times. So, company's profit margin compared to its competitors is lower.Rate of return on gross
Показать все assets (ROA)= 2008year: (ROA)= 442201650800=0.026 or 2.6 %2007 year: (ROA)= 879601468800=0.059 or 5.9%ROA has negative dynamic and 3.5 times lower than industry average that proves that management is not efficient at using company assets to generate earnings.return on equity (ROE)= Net Profit ÷ Average Shareholder Equity for Period2008 year: ROE= 44220460000=0.096 or 9.6%2007year: ROE= 879604600000=0.191 or 19.1%ROE has dramatically changed in 2008 for 9.5 %. As the level is les that industry average (18.2) company is unlikely to be one that is capable of generating cash internally.e) marketprice/ earnings ratio= Market Value per Share / Annual Earnings per Share 2008 year: price/ earnings=6/0.22=27.272007year: price/ earnings=8.5/0.22=38.6In 2007 the market value of every one dollar of earning is 38.6 and in 2008 – 27.27. Скрыть
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