Considerations 1. Do any of the companies appear to be at risk of not meeting their current liabilities? Which one and why? 2. Which company appears to utilize its assets the most efficiently? Why? 3. Do any companies appear to be over or under levered? What is the problem with being over levered? What is the problem with being under levered? 4. Which company appears to be the most profitable. Why? 5. Use the Dupont Equation to decompose the ROE for each firm. For the company with the highest ROE, what appears to be the driver? Explain. 6. Which company do you recommend be added to the fund holdings? Why? B58 D F 1.07 1.04 33.19 27 28 29 30 Current Ratio 31 32 Quick Ratio 33 34 Average Collection 35 36 Inventory Turnover 37 38 Inventory Conversion 39 40. Total Asset Turnover 41 42 Payables Period 43 44 Debt Ratio 45 46 Times Interest Earned 122 2.99 2.0 23.04 0.16 2.69 48 ROA 1.49% 6.6296 50 ROE 57 52 Net Profit Margin 0.9796 55 Cash Conversion Cycle 13.15 Dupont Equation 50 60 receivable period 33.19 62 COMPANY A COMPANY B COMPANY D E Total Equity 26 27 28 0.97 0.18 2.69 29 30 Current Ratio 31 32 Quick Ratio 33 34 Average Collection 35 36 Inventory Turnover 37 38 Inventory Conversion 39 40 Total Asset Turnover 41 42 Payables Period 43 7.03 51.9 2.77 32.88 26% 44 Debt Ratio 45 46 Times Interest Earned 9.53 7.65% 48 ROA 49 50 ROE 51 52 Net Profit Margin 20.80% 3.22% 55 Cash Conversion Cycle 21.70 50 Dupont Equation 59 60 recevable period 2.65 COMPANY A COMPANY B COMPANY C B C D 1.37 3.05 97.35 11 A 27 28 29 30 Current Ratio 31 32 Quick Ratio 33 34 Average Collection 35 36 Inventory Turnover 37 38 Inventory Conversion 39 40 Total Asset Turnover 41 42 Payables Period 43 44 Debt Ratio 45 46 Times Interest Earned 47 48 ROA 49 50 ROE 51 52 Net Profit Margin 33.8 1.1 77.95 60% -7.51 -29.13% -270.38% -43.90% + 54 55 Cash Conversion Cycle 53.23 56 57 58 Dupont Equation 59 60 receivable period 61 97.35 62 COMPANY A COMPANY B COMPANY C Considerations 1. Do any of the companies appear to be at risk of not meeting their current liabilities? Which one and why? 2. Which company appears to utilize its assets the most efficiently? Why? 3. Do any companies appear to be over or under levered? What is the problem with being over levered? What is the problem with being under levered? 4. Which company appears to be the most profitable. Why? 5. Use the Dupont Equation to decompose the ROE for each firm. For the company with the highest ROE, what appears to be the driver? Explain. 6. Which company do you recommend be added to the fund holdings? Why? B58 D F 1.07 1.04 33.19 27 28 29 30 Current Ratio 31 32 Quick Ratio 33 34 Average Collection 35 36 Inventory Turnover 37 38 Inventory Conversion 39 40. Total Asset Turnover 41 42 Payables Period 43 44 Debt Ratio 45 46 Times Interest Earned 122 2.99 2.0 23.04 0.16 2.69 48 ROA 1.49% 6.6296 50 ROE 57 52 Net Profit Margin 0.9796 55 Cash Conversion Cycle 13.15 Dupont Equation 50 60 receivable period 33.19 62 COMPANY A COMPANY B COMPANY D E Total Equity 26 27 28 0.97 0.18 2.69 29 30 Current Ratio 31 32 Quick Ratio 33 34 Average Collection 35 36 Inventory Turnover 37 38 Inventory Conversion 39 40 Total Asset Turnover 41 42 Payables Period 43 7.03 51.9 2.77 32.88 26% 44 Debt Ratio 45 46 Times Interest Earned 9.53 7.65% 48 ROA 49 50 ROE 51 52 Net Profit Margin 20.80% 3.22% 55 Cash Conversion Cycle 21.70 50 Dupont Equation 59 60 recevable period 2.65 COMPANY A COMPANY B COMPANY C B C D 1.37 3.05 97.35 11 A 27 28 29 30 Current Ratio 31 32 Quick Ratio 33 34 Average Collection 35 36 Inventory Turnover 37 38 Inventory Conversion 39 40 Total Asset Turnover 41 42 Payables Period 43 44 Debt Ratio 45 46 Times Interest Earned 47 48 ROA 49 50 ROE 51 52 Net Profit Margin 33.8 1.1 77.95 60% -7.51 -29.13% -270.38% -43.90% + 54 55 Cash Conversion Cycle 53.23 56 57 58 Dupont Equation 59 60 receivable period 61 97.35 62 COMPANY A COMPANY B COMPANY C