As an initial response to the discussion topic please create a Power Point presentation consisting of 5 slides, plus the title slide, that contains the main results of part 1 of the Research Project you developed about the company's financial performance, your recommendations on its (the Companys) financial stability, and which steps should be done to improve its financial stability

This is the report mention above:

Introduction

In this report, the financial analysis of West Rock Co. (WRK) will be undertaken. West Rock is an American corporation that is indulged in the manufacturing business of corrugated packaging boxes. Headquarter of the company is based at Atlanta, Georgia in United States. The company produces and sells packing papers and boxes in the markets of North America, South America, Europe, Asia, Australia and Europe. It belongs to the containers or packaging industry. The financial analysis of the company will be undertaken the key tool of financial management i.e. ratio analysis.

Financial Analysis

To analyse the financial performance of West Rock Co. the financial data for the last three years i.e. 2017, 2016 and 2015 has been taken. The intra-firms comparison of financial results for the different year facilitates the manager to assess the financial position of the business and the trend followed by the company in various financial aspects in the last few years can help them to assess the financial sustainability of the business for few of the coming years. To achieve the above purposes, common size analysis and trend analysis for the preceding 3 years has been carried in this report.

Also, as a part of financial analysis, an inter-firm analysis of the financial performance of West Rock in the major aspects such as profitability, liquidity, efficiency, solvency and gearing position has been carried out considering the financial performance of its major peers such as Packaging Corp of America, Graphic Packaging Holding Co. and Matthews International Corp. As the said companies belong to the same industry to which West Rock belongs, the industry comparatives have been used by taking the average of the financial results of these four corporations.

Common size analysis of West Rock in 2017

Income statement

It depicts that the gross profit of the company in 2017 is 18.44% of the sales. The operating expenses of the company are 12.82% of sales. The common size analysis has shown that the company has spent 10.96% amount as its selling and general administrative charges. Therefore, the operating profit of West Rock is 5.62 % which is not considerably higher. Also, it shows that the company has paid interest of 1.87% to its investors. Further, it has paid a tax of 1.07% of the total revenue from sales. The overall net income after tax earned by the company is 4.70%. Hence, the company can distribute 4.77% of its overall income from sales to its common stockholders.

Income Statement
	2017
Net Sales	14,859.70	100%
Cost of goods sold	12,119.50	81.56%
Gross profit	2,740.20	18.44%
Operating Expenses
Selling, General and Administrative Expenses	1629.2	10.96%
Pension expenses	32.6	0.22%
Impairment on land	46.7	0.31%
Restructuring cost	196.7	1.32%
Operating Profit	835.00	5.62%
Interest Expenses	277.7	1.87%
Income after interest	557.30	3.75%
Extra-ordinary gains	300.3	2.02%
Income from continuing operations before income taxes	857.60	5.77%
Income Tax	159	1.07%
Income after tax	698.60	4.70%
Loss/Gain from discontinued operations
Consolidated net income (loss)	698.60	4.70%
Loss/ Gain of non-controlling interests	9.6	0.06%
Net income (loss) attributable to common stockholder	708.20	4.77%

Balance sheet:

It shows that the company holds current assets of 17.90% of its total assets. However, it has the total current liabilities of 12% of its total assets. This clearly shows that the company is successful in maintaining the more balance in its current assets than its current liabilities. The total shareholder equity of the company is 41.40% of its total assets of the company whereas the total debt of the company is 58.60% of its total assets. This shows that company must face more financial leverage in 2017.

Balance sheet
	2017
ASSETS
Current Assets
Cash and Cash Equivalents	298.1	1.19%
Restricted Cash	5.9	0.02%
Accounts Receivables	1886.8	7.52%
Inventories	1797.3	7.16%
Other current assets	329.2	1.31%
Assets held for sale	173.6	0.69%
Total current assets	4490.9	17.90%
Property plant and equipment	9118.3	36.34%
Goodwill	5528.3	22.03%
Intangibles	3329.3	13.27%
Other assets	2622.2	10.45%
Total Assets	25089	100.00%
LIABILITIES AND EQUITY
Current liabilities:
Current portion of debt.	608.7	2.43%
Accounts payable	1492.1	5.95%
Accrued compensation and benefits	416.7	1.66%
Other current liabilities	492.3	1.96%
Total current liabilities	3009.8	12.00%
Long-term debt due after one year	5946.1	23.70%
Deferred income taxes	3410.2	13.59%
Other long-term liabilities.	2332.1	9.30%
Other liabilities	4.7	0.02%
Total liabilities	14702.9	58.60%
Equity
Common Stock	2.5	0.01%
Capital more than par value	10624.9	42.35%
Retained earnings (deficit)	172.4	0.69%
Accumulated loss	-457.3	-1.82%
Total stockholders equity	10342.5	41.22%
Non-controlling interest	43.6	0.17%
Total equity	10386.1	41.40%
Total Liabilities and Equity	25089	100.00%

Trend analysis of West Rock for 2017, 2016 and 2015

The gross profit of the company in 2017 is 18.44 % which is lesser than that of 2016 and 2015 where it was 19.47% and 19.22%. It shows the increasing trend. This is because of the increased percentage of cost of goods sold in 2017 as compared to 2016 and 2015. However, the operating profit of West Rock in 2017 is higher than that of 2016 because more operating expenses were incurred in 2016 as compared to 2015 and 2017. The interest expense has also increased in 2017. Further, the net profit of the company has been fluctuating since last 3 years and in 2017, West Rock has achieved a profitability of 4.77% which is higher than the profits of last 3 years.

Du Pont Analysis:

It is an extended study of Return on equity of the company which helps in assessing the profitability of the company. The ROE of West Rock in 2017 is higher than that of 2016 and 2015. It indicates that company has achieved higher returns for its shareholders.

Return on Equity	Net Profit Margin	x	Financial Leverage	x	Asset Turnover Ratio
Return on Equity	Net Profit	x	Total Assets	x	Sales
	Sales		Total Equity		Total Assets
2017	698.60	x	25089	x	14,859.70
	14,859.70		10386.1		25089
	4.70%	x	241.56%	x	59.23%
	6.73%
2016	154.80	x	23038.2	x	14,171.80
	14,171.80		9830		23038.2
	1.09%	x	234.37%	x	61.51%
	1.57%
2015	501.20	x	11124.80	x	11,124.80
	11,124.80		11783.9		25372.4
	4.51%	x	94.41%	x	43.85%
	1.86%

Financial Ratio analysis:

Intra firm:

The current ratio of West Rock has shown the declining trend since last 3 years and it show that company is not efficiently utilising its current assets to manage its current liabilities. Therefore, the liquidity position of the company is worsening since 2015. The declining receivables turnover ratio since 2015 shows that the company is efficient enough in 2017 to convert its credit sales into cash in minimum time. The net profit ratio is showing increasing trend since 2015 and it indicates that the company is striving to maintain sound profitability position. The financial leverage of the company has slightly increased in 2017 as depicted from debt equity ratio and it shows that company has higher financial risk in 2017 as compared to last 2 years (West Rock, 2016).

Liquidity		2017		2016		2015
Current Ratio	Current Assets	$ 4,490.90	1.49	$ 3,912.60	1.79	4176	1.92
	Current Liabilities	$ 3,009.80		$ 2,183.00		2178.6
Quick Ratio	Quick Assets	$ 2,693.60	0.89	$ 2,274.40	1.04	$ 2,415.00	1.11
	Current Liabilities	$ 3,009.80		$ 2,183.00		2178.6
Efficiency
Inventory Turnover Ratio	Cost of Goods Sold	$ 12,119.50	7.06	$ 11,413.20	6.72	$ 8,986.50	10.21
	Average Inventory	1717.75		1699.60		880.50
Receivables Turnover Ratio	Net Sales	$ 14,859.70	8.54	$ 14,171.80	8.95	$ 11,124.80	14.12
	Average Total Receivables	$ 1,739.50		$ 1,583.80		$ 787.70
Profitability
Return on Equity	Net Income After Preference Dividends	$ 708.20	6.82%	$ -396.30	-4.03%	$ 516.50	4.38%
	Common Stock Holder's Equity	$ 10,386.10		$ 9,830.00		$ 11,783.90
Net Profit Ratio	Net Profit	$ 698.60	4.70%	$ 154.80	1.09%	$ 501.20	4.51%
	Net Sales	$ 14,859.70		$ 14,171.80		$ 11,124.80
Solvency
Debt Ratio	Total Debt	$ 14,702.90	0.59	$ 13,208.00	0.57	$ 13,587.70	0.54
	Total Assets	$ 25,089.00		$ 23,038.20		$ 25,372.40
Debt to Equity Ratio	Total Debt	$ 14,702.90	0.59	$ 13,208.00	0.57	$ 13,587.70	0.54
	Total Equity	$ 25,089.00		$ 23,038.20		$ 25,372.40
Valuation
Earnings Per Share	Net Income After Preference Dividends	$ 708.20	1.18	$ -396.30	-0.66	$ 516.50	0.86
	Total Common Stock	$ 600.00000		$ 600.00000		$ 600.00000

Inter firm:

Comparison of West Rocks financial results with its major competitor i.e. Packaging Corp of America)

In liquidity terms Packaging Corp is better than that of West Rock because of its better current ratio which shows that former company has enough current assets to meet its current liabilities. Also, in profitability terms, Packaging Corp has superseded West Rock and its observed from its higher net profit ratio. However, the solvency position and asset usage efficiency position of the Parking Corp is not as better as West Rock as depicted by debt equity and receivable turnover ratio of both the companies (West Rock, 2017).

Liquidity
Current Ratio
West Rock	1.49:1
Packaging Corp of America	2.3:1
Profitability
ROE
West Rock	6.82%
Packaging Corp of America	33.63%
Net profit
West Rock	4.70%
Packaging Corp of America	10.29%
Solvency
West Rock	0.59
Packaging Corp of America	1.15
Efficiency
Receivable Turnover Ratio
West Rock	8.54 times
Packaging Corp of America	8.42 times

Industry comparatives:

The average industry current ratio is 1.81:1 while the current ratio of the concerned company is 1.49:1. It shows that the company is not able maintaining its liquidity position in the market. The average industry ROE is 18.99% whereas the ROE of West Rock is 6.82% which is significantly lower than the industry standards. The solvency position of the company as depicted by the debt equity ratio of 59 % shows that the company is using less external debt to finance its assets in comparison to its peers. Hence, it is less risky in relation to its industry. Further, the industry average for the receivable turnover ratio is 8.94 times and that of West Rock is 8.54 times. Thus, it can be said that the company is efficient to manage its accounts receivables as per the industry standards.

Industry Comparatives	Industry comparatives	West Rock Financials
Liquidity
Current Ratio
West Rock	1.49
Packaging Corp of America	2.3
Graphic Packaging Holding Co	1.37
Matthews International Corp	2.09
Average	1.81	1.49
Profitability
ROE
West Rock	6.82
Packaging Corp of America	33.63
Graphic Packaging Holding Co	25.57
Matthews International Corp	9.93
Average	18.99	6.82
Net profit
West Rock	4.70
Packaging Corp of America	10.29
Graphic Packaging Holding Co	6.82
Matthews International Corp	4.91
Average	6.68	4.70
Solvency
Debt Equity
West Rock	0.59
Packaging Corp of America	1.15
Graphic Packaging Holding Co	1.71
Matthews International Corp	1.12
Average	1.14	0.59
Efficiency
Receivable Turnover Ratio
West Rock	8.54
Packaging Corp of America	8.42
Graphic Packaging Holding Co	13.86
Matthews International Corp	4.93
Average	8.94	8.54

Recommendations:

From the above analysis, it can be said that West Rock will have to improve its financial position, especially in terms of profitability and liquidity to sustain in the market where there is intense competition. This suggestion could be given considering the Net profit ratio, ROE and the current ratio of the company which are quite lower than the industry benchmarks.

Reflective Writing:

From the above application of key tool of financial and accounting studies i.e. ratio analysis tool, I have learnt the practical meanings of the different ratios. The practical implementation of ratio analysis technique has helped us to understand as to how the financial performance of any firm can be assessed using the financial results given in annual report of that firm.

Conclusion:

The above report can be summarised by stating that the financial position of West Rock is not sound as per the standards of the industry to which it belongs. However, it can be said individually the firm is performing well in the current year i.e. 2017, particularly in terms of its profitability and asset usage efficiency. However, the liquidity position of the company cannot be said as satisfactory because of low current and quick ratio

References:

West Rock. (2016). Annual Report. Retrieved from https://s21.q4cdn.com/975972157/files/doc_financials/annual/WRK_AnnualReport_2016vF.pdf

West Rock. (2017). Annual Report. Retrieved from http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_WRK_2017.pdf