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Research different data visualization systems such as Domo, Tableau, and Microsoft Power BI

Today’s businesses rely heavily on data in decision making. Data is collected and stored in the different applications used such as a CRM, ERP, SCM, etc. Data can then be compiled and presented in a dashboard format to better visualize company performance. 

Research different data visualization systems such as Domo, Tableau, and Microsoft Power BI. Review how the systems draw data from business databases and how the data needs to be organized or structured in order for it to be used effectively.

Note: 300 words with Data (charts) researched

Jim Moor claims that computing will “ transform social institutions.” Evaluate this claim.

Jim Moor claims that computing will  transform social institutions.” Evaluate this claim.

Cornell notes after reading materials,

Write Cornell notes after reading materials, Cornell Notes are designed to engage critical thinking, analysis, and synthesis. Use uploaded ‘Cornell Notes Template.doc’ to write.

2. No less than 350 words.

3. All WRITING, IDEAS, and INFORMATION used in your assignments that come from journal articles, the Internet, textbooks, etc. must be properly cited.

Course for Sociology of Race/Ethnicity, Class, and Gender.

How would you define what makes someone an expert witness?

You are an intern working with a state crime scene investigation team that has statewide jurisdiction and gets called in by county and municipal authorities for crime scene analysis and laboratory support. A number of larger cities in the state have their own crime scene units. Because crime scene investigators (CSIs) get called into court to testify as expert witnesses, your unit has a lot of opportunities to testify in court. The state you live and work in has assumed the Federal Rules of Evidence Rule 702 as their own for expert witness testimony. They also have the Frye Standard (common in many states).

You will be presenting a paper to the State Division of the International Association for Identification Conference in the Capital next week. You will be presenting a paper on the topic of the admissibility of expert witness testimony in court.

Address the following in 3-4 pages:

  • How would you define what makes someone an expert witness?
  • Who can be an expert witness? Explain.
  • What restrictions are placed on expert witnesses?
  • How are lay witnesses and expert witnesses different? Explain in detail.
  • Explain the Daubert Rule in contrast to the Frye Standard, and disclose which one of the two would allow for the identification of more expert witnesses if they were used exclusively.

Financial Ratio analysis

Palomar Health Financial Ratio analysis

Introduction

Palomar Health is a health facility that was began in the early 1930s. Its objective is to heal, comfort, and promote health in the communities it serves. Palomar Health’s financial statements over the last five years have been compiled. Based on that information, this paper seeks to analyze the financial performance and financial condition of Palomar Health.

Liquidity Ratio.

Liquidity is measured using liquidity ratios which indicate the ability of Palomar Health to remain in business. They are fundamentally the most important way to measure financial performance. For the three years of the audited reports, the ratios are as follows;

Current ratio; This measures the liquidity of Palomar Health, to cover for their current liabilities. The current ratio = Current Assets/Current Liabilities

2013; $299,103/$115,966 = 2.5

2014; $314,047/$110,960 = 2.8

2015; $355,385/137,148 = 2.6

There is an increase in the liquidity of Palomar Health over the three years. The ideal current ratio is 2;1.

Profitability Ratio.

Every operating firm is concerned with its profitability and Palomar Health is not an exemption. Over the three audited years, that is, 2013,2014 and 2015, the net position is decreasing. The operating expenses are increasing more than the operating revenues are. Palomar Health should find a way to mitigate the rising expenses in order to break-even.

Leverage Ratio.

Leverage is measured using leverage ratios which indicate how much Palomar Health is depending on debt to fund its operations and its ability to pay these debts. The leverage ratios for Palomar Health over the three years are as follows;

Debt to Equity ratio; This ratio measures Palomar Health’s willingness to fund its operations with debt over equity.

 

Financial Performance

J Sainsbury PLC Financial Performance

Background and operation analysis

J Sainsbury PLC is the second biggest retailer in the UK after Tesco with stores operating in different parts of the UK. The retailer was established and incorporated in 1869 in the UK, and it is increasingly facing the threat of new entrants in the UK market and foreign competitors (Sainsbury, 2017. As the buyers have changed their shopping habits, the company has had to adapt to the new market realities. For instance, people go for more grocery shopping trips than before, buy they buy fewer products and are seeking the most convenient way to shop. It is no surprise that the discount and convenience stores have reduced the retailer’s market share (Canadean, 2016). Similarly, there has been a shift towards online shopping, and while this account for a small share of sales as some of the shoppers prefer this option. The pressure to lower labour costs in an environment with increased competition has also meant that there is price defilation in the food retail market. Efforts to improve sales through the discount sector, convenience stores and online platforms have been crucial to dealing with the down in sales revenue even as there are declines in supermarket stores.

Increasingly, J Sainsbury has improved the home delivery service to increase its reach to the UK population. There are also shops operating under the retailer brand, with the Sainsbury Bank and property joint ventures also important sources of income revenue for the company. Sainsbury acquired the Home Retail Group in 2016 with the aim of expanding operations, while music production and the grocery store still an important source of revenue (Canadean, 2016). Like other retail companies offering food products there is a wide variety of products, with changes in demand and population growth key drivers of the company’s performance. One of the main challenges in the industry is that there is intense competition that has resulted in low margins for the retail sector players.

Competition

Tesco, WW Morrison Supermarkets and ASDA are the main competitors in the retail and supermarket sector in the UK, as is ASDA Group. While the company has used multiple channels strategy to maintain and increase profitability, the financial performance has also been declining with cost cutting measures a priority in the company and for the supermarkets and convenience stores in the UK. Market players have combined the tradition convenience store, supermarket and the online business avenues to increase the direct-to-consumer business. While the other market players also expanded operations in various areas of operations in the US, there was increased consolidation through mergers and acquisitions. The challenge for J Sainsbury is to match the competitors’ growth rate and increase the market share. Even as Sainsbury returned to profitability in 2016, this was not the result of store closure, and price fall in the grocery segment affecting the company and the competitors who have heavily invested in the fresh food market.

  SBRY TSCO MRW
Market Cap. £5.44Bn £16.83Bn £5.36Bn
Price/Earnings 10.56 70.14 23.97
Div. Yield 4.40% 0 2.18%
Employees 161,000 476,000 132,000
Outlets 1312 6702 515

Sainsbury’s versus Tesco as at December 2016

February 2017 grocery market share Kanter report

<https://www.kantarworldpanel.com/en/grocery-market-share/great-britain>

Financial Performance

Net Profit Margin (NPM)

The net profit margin is the ratio of net profits to sales, and while t sales revenue have been flat at 23.3 billion to 23.5 billion in the year ended December 2013 to December 2016 the net income improved in from 2014 to 2015 from 166.1 million to 471 million (Yahoo Finance, 2017). A closer look at the revues, costs and incomes shows that recuing the selling, the general and administrative costs was effective in improving the company’s profitability despite flat revenues. Even as the administrative costs have been low compared to Tesco, this is mainly because the retailer has maintained operations in the UK, but Tesco has expanded internationally and this has increased the administrative costs substantially. The last financial year for Sainsbury was March 31, 2016 and for comparison purpose with the competitors. The financial details at the end of December in each year are considered. Proper planning was crucial to improved profitability in 2016 with efforts to keep costs in check, even as the revenue reduced by 1.13% from 2014 to 2016.

Extract of net income

Period Ending 3/12/2016 3/14/2015 3/15/2014 3/16/2013
Net Income 471,000 -166,000 716,000 602,000

Return on Capital Employed (Capital ROCE)

ROCE= (Net Profit (PBIT)/ capital employed) x 100%

The ROCE indicator is a primary ratio that reflects returns management based on the resources available and efforts to distribute the returns. ROCE increased since the company returned to profitability at 7.24 compared to 0.57 in 2015, but even the 2016 figure was lower that the returns in the years 2012-2014. The effect of exchange rate fluctuations will likely affect the business performance, and there is a need for strategic planning to address concerns on slower than expected rise in profitability. The retail market is competitive and missteps in strategic decisions would likely affect the financial performance beyond the current year of operation.

Net Profit Margin 9.6 10.82 0.57 7.24
Year 2013 2014 2015 2016

Return on Equity (ROE)

ROE= Net Profit before Interest and Tax/ Shareholder Funds. When compared to the food and drug retail stores competing with Sainsbury’s, the company’s ROE was low. There is a need to improve the capital invested for the company to be comparable with the Food & Drug Retailer industry players. The challenge is to determine whether Sainsbury is overvalued and the low ROE was no surprise and determine whether expectations about future earnings are realistic. The ROE also depends on the net profit margin, and comparing this with the competitors in the food and drug industry.

Year 2013 2014 2015 2016
Return on Equity 15.11 16.81 1.46 11.11

.

References

Canadean. (2016, Nov 11). J sainsbury plc : Retailing – company profile, SWOT & financial analysis- 2016. . Basingstoke: Progressive Digital Media

Claudia-Maria, B. O. B. E., & Dragomir, V. D. (2010). The sustainability policy of five leading European retailers. Accounting and Management Information Systems, 9(2), 268.

Vizard, S. (2014). Sainsbury’s unveils new marketing plans as sales and profits drop. Retrieved from

https://www.marketingweek.com/2014/11/12/sainsburys-unveils-new-marketing-plans-as-sales-and-profits-drop/

Sainsbury.(2017). Sainsbury. Retrieved from http://www.j-sainsbury.co.uk/about-us/business-structure/

Terry, H. (2012), Operations Management (3nd Ed.), Palgrave MacMillan

Appendix

Balance Sheet
Period Ending 3/12/2016 3/14/2015 3/15/2014 3/16/2013
Current Assets
Cash And Cash Equivalents 577,000 403,000 1,592,000 517,000
Short Term Investments
Net Receivables 231,000 251,000 255,000 258,000
Inventory 968,000 997,000 1,005,000 987,000
Other Current Assets 252,000 274,000 173,000 104,000
Total Current Assets 4,444,000 4,505,000 4,369,000 1,914,000
Long Term Investments 365,000 398,000 443,000 567,000
Property Plant and Equipment
Goodwill 138,000 139,000 144,000 100,000
Intangible Assets
Accumulated Amortization
Other Assets
Deferred Long Term Asset Charges
Total Assets 16,973,000 16,537,000 16,540,000 12,695,000
Current Liabilities
Accounts Payable 2,082,000 2,089,000 1,846,000 1,908,000
Short/Current Long Term Debt 2,824,000 3,027,000 2,870,000 2,851,000
Other Current Liabilities 798,000 812,000 819,000 693,000
Total Current Liabilities 6,724,000 6,923,000 6,765,000 3,115,000
Long Term Debt 2,122,000 2,375,000 2,110,000 2,482,000
Deferred Long Term Liability Charges
Minority Interest
Negative Goodwill
Total Liabilities 10,608,000 10,998,000 10,535,000 6,857,000
Stockholders’ Equity
Misc. Stocks Options Warrants
Redeemable Preferred Stock
Preferred Stock
Common Stock 1,664,000 1,656,000 1,636,000 1,616,000
Retained Earnings 3,391,000 3,075,000 3,569,000 3,422,000
Treasury Stock 1,310,000 808,000 798,000 799,000
Capital Surplus 137,000 169,000 161,000 139,000
Other Stockholder Equity
Total Stockholder Equity
Net Tangible Assets

Cash flow statement

Period Ending 3/12/2016 3/14/2015 3/15/2014 3/16/2013
Net Income 471,000 -166,000 716,000 602,000
Operating Activities, Cash Flows Provided By or Used In
Depreciation 569,000 564,000 539,000 509,000
Adjustments To Net Income
Changes In Accounts Receivables -25,000 -57,000 13,000 -34,000
Changes In Liabilities
Changes In Inventories 12,000 6,000 -19,000 -57,000
Changes In Other Operating Activities -377,000 -230,000 -15,000 -22,000
Total Cash Flow From Operating Activities 392,000 911,000 939,000 981,000
Investing Activities, Cash Flows Provided By or Used In
Capital Expenditures -646,000 -951,000 -916,000 -1,067,000
Investments
Other Cash flows from Investing Activities
Total Cash Flows From Investing Activities -400,000 -900,000 426,000 -862,000
Financing Activities, Cash Flows Provided By or Used In
Dividends Paid
Sale Purchase of Stock
Net Borrowings
Other Cash Flows from Financing Activities 13,000 17,000 -9,000 21,000
Total Cash Flows From Financing Activities -128,000 -314,000 -290,000 -354,000
Effect Of Exchange Rate Changes
Change In Cash and Cash Equivalents -136,000 -303,000 1,075,000 -235,000

 

https://uk.finance.yahoo.com/quote/SBRY.L/financials?p=SBRY.L

Income Statement

Revenue 3/12/2016 3/14/2015 3/15/2014 3/16/2013
Total Revenue 23,506,000 23,775,000 23,949,000 23,303,000
Cost of Revenue 22,050,000 22,567,000 22,562,000 22,026,000
Gross Profit 1,456,000 1,208,000 1,387,000 1,277,000
Operating Expenses
Research Development
Selling General and Administrative
Non Recurring
Others
Total Operating Expenses 22,821,000 23,725,000 23,136,000 22,437,000
Operating Income or Loss 685,000 50,000 813,000 866,000
Income from Continuing Operations
Total Other Income/Expenses Net
Earnings Before Interest and Taxes 685,000 50,000 813,000 866,000
Interest Expense -125,000 -126,000 -129,000 -128,000
Income Before Tax
Income Tax Expense 77,000 94,000 182,000 170,000
Minority Interest
Net Income From Continuing Ops
Non-recurring Events
Discontinued Operations
Extraordinary Items
Effect Of Accounting Changes
Other Items
Net Income
Net Income 471,000 -166,000 716,000 602,000

https://uk.finance.yahoo.com/quote/SBRY.L/financials?p=SBRY.L

 

Financial Decision Making

 

 

Financial Decision Making-British American Tobacco (BAT)

British American Tobacco (BAT) is a UK based company, whose main business is manufacturing and selling of tobacco products. It was founded in 1902 with its main tobacco products including, cigarettes, fine-cut, snus and cigars. The company has at least 200 tobacco products’ brands in over 200 global markets. Some of its leading global brands include Dunhill, Kent, Lucky Strike, Pall Mall and Rothmans among others. The company is a market leader within its industry in 55 countries, serving at least an eighth of the a billion adult smokers globally (ADVFN, 2017). The company boasts of consistently being mentioned among the top ten companies in the London Stock Exchange.

Among BAT’s closest and long term competition is another FTSE100 company in Bristol, UK – Imperial Brands Plc (IMB). The company has been ranked as the fourth largest tobacco company globally, operating under its five subsidiaries namely: Imperial Tobacco, Tabacalera, ITG Brands, Fontem Ventures and Logista. The company is highly diversified within the industry, producing cigarettes, cigars, fine-cuts, smokeless tobacco, e-vapour products and rolling papers (The telegraph, 2017). Among the company’s leading brands include Davidoff, West, JPS, Gauloises Blondes and Golden Virginia among a host of others sold in its 160 markets globally. This paper is a performance-based comparison for the two companies, to facilitate financial and investment decision making across five years ending 2016.

Company Financial Performance

Trend analysis

Turnover. The net sales figures for BAT Plc are stagnant around £46 billion for the five year period under observation as seen on Appendices 1(a) and 1(b). However, there is a slight reduction in 2015 to £41 billion which is recovered in the next financial period. This is represented by the slight dip on the graph in appendix 1(b). A similar trend is observed for IMB’s turnover across the same period. However IMB’s turnover is much lower than BAT’s, stagnating around £28 billion (The telegraph, 2017). This indicates that the drop in turnover is industry related and not specific to BAT.

Profitability. As expected, BAT is more profitable than IMB given the respective sales. There is a sharp drop in BAT’s 2013 profits, which is recovered in the subsequent periods as seen on appendices 2 (a) and 2(b). Imperial brands is seen to be consistently increasing its profits from 2012 to 2015, however there is a sharp drop in its profits for 2016. The issues resulting in the fluctuations observed in profitability across the periods seem to be company specific and not industry-wide.

Net Assets. BAT’s net assets experienced a gradual decline from 2012 to 2015, where it even fell below IMB’s as seen on appendices 3 (a) and 3(b). This trend in however reversed in 2016 which recorded the highest net assets for the five years at £8.4 billion for BAT. IMB’s net assets drop slightly but consistently for the first three years of observation but slowly recover in the next two financial periods (The telegraph, 2017). IMB has slightly lower stock of assets as compared to BAT across the period aside from 2015 as seen on appendix 3(c).

Operating Cash flow. BAT has an operating cash flow double that of IMB’s across the periods except for 2014. A similar trend observed with BAT’s profitability replicates in its operating cash flow curve, with a sharp drop in 2014, which is recovered afterwards as seen on appendices 4 (a) and 4 (b). Imperial brand plc is consistently growing its operating cash flow across the periods under observation. Again the causes for the observed trends, does not seem to be industry wide.

Share performance. The share price of BAT plc is on a positive trajectory across the period of observation. However in 2015 the share price of BAT is seen to experience its lowest point, which recovers in the subsequent periods, to close at its highest in 2016 as seen on appendices 5(a) and 5(b). In 2016 Imperial Brand Plc rebranded from Imperial Tobacco Group Plc which makes a trend of its stock prices to only represent the 2016 / 17 prices (ADVFN, 2017). The graphs of BAT and IMB across the comparable periods depict a uniform trend, representative of industry-wide effects on the share prices.

Ratio analysis

Gearing ratio. The debt ratio is an example of a gearing ratio that shows the portion of a company’s total assets that is financed from debt. A higher debt ratio relative to competitors’, indicates higher financial risk however the ratio is not comparable across industries. As seen on appendix 6(a), BAT’s debt ratio is lower than IMB’s in the first two years (The telegraph, 2017). However BAT increases its portion of assets financed using debt to the 2015 level that surpasses IMB’s gearing level in 2016.

Profitability ratio. The net profit ratio shows the percentage that is derived as net profits from a company’s net sales in any given period. A higher ratio across competitors indicates the higher profitability. As observed earlier BAT is more profitable than IMB, however the graph shows a kink in the curve similar to one observed earlier. This confirms a low profitability 2014 season for BAT. Again IMB’s profitability is seen to grow from 2012 but drops sharply in 2016 probably due to the 2016 name and the structural changes in the organization.

Liquidity ratio. A company is said to be liquid enough if its current assets are enough to pay up its available current liabilities at a point in time. This is better elaborated using the current ratio. As seen on appendix 6(c), BAT and IMB started at almost the same level of liquidity in 2012 however across the years BAT increases its liquidity far higher than IMB (The telegraph, 2017). This indicates sustainability and proper asset management by the company.

Efficiency ratio. The assets turnover ratio is a ratio showing how efficiently a company utilizes it asset to generate turnover or sales for them. BAT is seen to be more efficient than IMB on appendix 6(d), however there is a negative trend being experienced across the periods. The trend is uniform in both companies which is an indication that the reason for reduced efficiency is industry-wide.

Corporate Governance and Corporate Social Responsibility

BAT has devolved its corporate social responsibility activities to its regional offices to ensure highest impact given its market size and global reach. However these efforts are coordinated to ensure the overall organization’s sustainability plans are adhered to. Preparation and announcement of mandatory and other necessary reports has been made timely. This improves stakeholder awareness and participation which increases the level of corporate governance (BAT, 2017). Some CSR activities conducted regionally include cigarette prevention activities for the youth, adherence to the group’s international marketing principles, and reviewing the group’s leaf strategy – aimed at improving the welfare of farmers in tobacco growing regions, among a host of others (ADVFN, 2017). In addition, activities like risk planning by estimating the amount of damage that may result from non-compliance with the company policies and procedures is done to ensure future sustainability. The company is also seen to produce tobacco products of the future, including e-cigarettes and e-vapour tubes, highly common among the millennial population. As a frequent top ten in performance within the FTSE100, BAT is guided by principles that ensure this position is maintained.

Conclusion

The above performance based comparison of two companies within the tobacco manufacture industry, provides a basis for financial decision making. The performance of BAT using the ratios and financial observations depict a stable security with growth prospects given its global market reach. The company is seen to be more profitable and efficient in its operations, while maintaining the best level of current and fixed assets vis-a-viz its competition – IMB plc. However the company has an increased appetite for debt to finance its assets, which is a financially risky practice. All in all the company is a good buy and a stable investment for a futuristic investor.

References

ADVFN.(2017). British American Tobacco. Retrieved on 1st of March 2017 from, http://uk.advfn.com/stock-market/london/british-american-tobacco-BATS/share-price-history?xref=navmenu_sharepricehistory

BAT.(2017). Key activities of the CSR Committee in 2015. Retrieved on 1st of March 2017 from, http://www.bat.com/group/sites/uk__9d9kcy.nsf/vwPagesWebLive/DO95XQ8J

The telegraph.(2017). Fundamentals for British American Tobacco. Retrieved on 1st of March 2017 from, http://shares.telegraph.co.uk/fundamentals/?epic=BATS

The telegraph.(2017). Fundamentals for Imperial brands. Retrieved on 1st of March 2017 from, http://shares.telegraph.co.uk/fundamentals/?epic=BATS

 

Appendices

Appendix 1: Turnover £(M)

Appendix 1(a) table of turnover trends for the companies
Period BATS Imperial Brands
2012 45,872 28,574
2013 46,185 28,269
2014 42,506 26,625
2015 41,000 25,289
2016 46,887 27,634

Appendix 1(b) Graph of turnover trends for the companies

Appendix 2: Profitability £(M)

Appendix 2(a) table of net profit trends for the companies
Period BATS Imperial Brands
2012 4,122 699
2013 4,199 961
2014 3,393 1,451
2015 4,522 1,723
2016 4,839 699

Appendix 2(b) Graph of net profit trends for the companies

Appendix 3: Net Assets £(M)

Appendix 3(a) table of Net Assets trends for the companies
Period BATS Imperial Brands
2012 7779 6084
2013 6935 5648
2014 5814 5477
2015 5032 5696
2016 8406 5742

Appendix 3(b) Graph of Net Assets trends for the companies

Appendix 4: Operating Cash flow £(M)

Appendix 4(a) table of Operating Cash flow trends for the companies
Period BATS Imperial Brands
2012 4427 2119
2013 4436 2352
2014 3716 2548
2015 4720 2747
2016 4620 3157

Appendix 4(b) Graph of Operating Cash flow trends for the companies

Appendix 5: Share performance

Appendix 5(a): BAT Shares price performance trend

For the five year period ended 2016

http://charts.moneyam.com/Chart.aspx?Provider=EODIntra&Size=283*186&Skin=BlueWhite&Type=2&Scale=0&Span=YEAR5&Layout=AJBBrandMedium&Code=BATS&Cycle=DAY14

Appendix 5(b): Imperial Brands Plc Shares price performance trend

For the period of name change in 2016

http://charts.moneyam.com/Chart.aspx?Provider=EODIntra&Size=283*186&Skin=BlueWhite&Type=2&Scale=0&Span=YEAR5&Layout=AJBBrandMedium&Code=IMB&Cycle=DAY14

Appendix 6: Ratio analysis

Appendix 6(a): Gearing ratio trend analysis

For the five year period ended 2016

Debt ratio = Total Liabilities / Total Assets

Period BATS Imperial Brands
2012 0.72 0.78
2013 0.74 0.80
2014 0.78 0.79
2015 0.84 0.81
2016 0.79 0.83

Graphical representation of gearing ratio trend analysis

Appendix 6(b): Profitability ratio trend analysis

For the five year period ended 2016

Net profit margin = Net Profit / Net Sales

Period BATS Imperial Brands
2012 0.12 0.04
2013 0.13 0.05
2014 0.11 0.06
2015 0.14 0.07
2016 0.13 0.03

Graphical representation of the Net profit margin ratio trend analysis

Appendix 6(c): Liquidity ratio trend analysis

For the five year period ended 2016

Current ratio = Current Assets / Current liabilities

Period BATS Imperial Brands
2012 0.81 0.78
2013 1.13 0.76
2014 1.04 0.80
2015 1.09 0.82
2016 1.04 0.74

Graphical representation of the Current ratio trend analysis

Appendix 6(d): Efficiency ratio trend analysis

For the five year period ended 2016

Total Asset turnover ratio = Net Sales / Average Total Assets

Period BATS Imperial Brands
2012 1.68 1.03
2013 1.72 1.00
2014 1.62 1.02
2015 1.30 0.84
2016 1.18 0.84

Graphical representation of the Total Asset turnover ratio trend analysis

 

Financial Ratios

 

Financial Ratios

Introduction

Financial ratios are used in indicating the relationship between financial statement items. Despite providing historical information, a corporation’s management can use the ratios in identifying its weaknesses and strengths, in addition to helping them predict their futuristic financial performances (Sarkodie & Asiedu, 2015). Basu (2017) allude that investors use financial ratios when comparing companies in the same industry. The ratios are significant when used in comparison with other firms’ numbers in the industry or the corporation’s historical data. This paper discusses the four common financial ratios used by business entities that include the liquidity ratio, profitability ratio, solvency ratio and efficiency ratio.

The Liquidity Ratio

The liquidity ratio is referred to as the current ratio. It is the ratio of current assets to current liabilities as it helps the business learn its capacity to pay debts. Any rate that is below one indicates that the company has more liabilities whereas one that is more than one suggests a safety cushion (Basu, 2017). A ratio of more than one shows increased inventory and receivable balances may not be cashed. Current ratios can be bettered by paying debts, transforming short-term debts into long-term, buying inventory when needed besides collecting receivables at a faster rate.

Profitability Ratio

They are used to show the executive’s ability to transform sales into cash flow and profits. Commonly, they are the operating margin, gross margin, and the net income margin. Operating Margin = Operating Profits/Sales

Gross Margin = Sales Less – Goods Sold Cost

Net Income Margin = Ratio of Net Income/ Sales

Delen, Kuzey & Uyar (2013) allude that the operating profit is the gross profit fewer taxes and interests. The return on asset ratio is the ratio of net income to total assets that is used in determining a corporation’s efficiency in lodging its assets for more profitability. The return on investment ratio; that is the ratio of net income to the shareholder equity shows a firm’s power to generate more revenue and profits.

Solvency Ratio

Solvency ratio is used to show how stable company is regarding debts against the equity and assets. Citing Basu (2017) when a business has massive debts, then it is not afforded the flexibility to maintain fluid cash flow if the operating conditions turn hostile or the rates of interest increases. The common solvency ratios are debt to equity and debt to asset ratios (Kennon, 2017).

Debt to Equity = Total Debt to Shareholders’ Equity = Total Assets – Total Liabilities

Efficiency Ratio

Two common efficiency ratios are the receivable and inventory turnover.

Inventory Turnover = Cost of Goods Sold/ Inventory

Receivable Turnover = Credit Sales/ Accounts Receivable

According to Tugas (2012) high inventory turnover ratio implies that a business is successful regarding transforming inventory into sales while a large accounts receivable turnover implies that a company is successful in collecting its credit balances.

References

Basu, C. (2017). Four basic types of financial ratios used to measure a company’s performance. Retrieved on February 9, 2017, from www.smallbusiness.chron.com/four-basic-types-financial-ratios-used-measure-companys-oerformance-25299.html

Delen, D., Kuzey, C., & Uyar, A. (2013). Measuring firm performance using financial ratios: A decision tree approach. Expert Systems with Applications, 40(10),3970-3983.

Kennon, J. (2017). Financial ratio guide. The Balance. Retrieved on February 9, 2017, from www.thebalance.com/financial-ratio-guide-357501

Sarkodie, E., & Asiedu, D. K. (2015). Financial ratios (accounting ratios) and survival of microfinance institutions in Ghana. Journal of Business and Financial Affairs, 4(3):1-3.

Tugas, F. C. (2012). A comparative analysis of the financial ratios of listed firms belonging to the education subsector in the Philippines for the years 2009-2011. International Journal of Business and Social Science, 3(21):173-190.

 

Kitchen Warehouse Financial Analysis

Kitchen Warehouse Financial Analysis

 

  1. Key Financial Ratios of the Company

Performance in a company is evaluated using a number of Financial Ratios. The management of the company evaluates different financial ratios to in order to understand the state of financial position of the business. In this case, it becomes easier to make financial decisions in the company in regard to their current performance. In addition, this is used to show the progress of the company from time to time. There are a number of key performance ratios that we will look upon and see how the company has been performing over the years and analyze the significance of these ratios.

The Current Ratio

The current ratio plays an imperative role in the organization because it ensures that the company is able to evaluate in terms of its ability to offset its debts whenever they arise. The current ratio is arriving at by comparing the total number of assets towards the total liabilities in a given financial year. In this case, we can see that the number of assets has been changing over the past year. In this case, we can see that the total number of assets in 2014, 2015, and 2016 was 496,687, 494,110 and 546, 872 respectively. On the other hand, the current liability in the same order of years was 90,690, 97,390, and 107,839. We can see that there was a slight drop in the number of assets in 2015 but the company was later able to achieve a good number in 2016. On the other hand, it is evident from the figures that the company has increased its debts over the three years. This is an indication that the company has been depending on leverage hence the slight increases. In this case, the current ratio for the three years, 2014, 2015, and 2016 is 5.47, 5.07, and 5.07. this indicates that the current ratio for the nosiness has decreased slightly over the recent years. However, this figure implies that the business is in a position to offset its debts whenever they arise. This has been achieved through an increase in the number of total assets by the company as they try to maintain their liabilities at the lower end.

Return on Assets (ROA)

This is another key ratio that is used in the market to weigh the performance of the company in the industry. This is used to indicate the profitability of the organization that is influenced by the assets in an organization. The ROA of the company can be attained by looking at the ratio between the net income and the total number of assets of the company. It is evident from the text that the net revenue of the company for the three years, 20114, 2015, and 2016 was 62,382, 60,681, and 67,164. On the other hand, the total number of assets for the business for the same years was 496,687, 494,110 and 546, 872 respectively. In this case, ratio between the two further indicate that the ROA of the company for the years 2014, 2015, and 2016 was at 0.125 (12.5%), 0.1228 (12.28%), and 0.1228 (12.28%). We can then allude that the ROA is an efficient value that explains the extent to which assets are impacting the organization. It is because assets in the organization can be improved through application of a successful management in the industry. This works in a manner that the organization is able to market its product hence this ensures that the sales increase which provides the company with revenue to increase on their assets. Assets are very significant because they further ensure that there is stability in a business. On the other hand, increasing the number of assets ensures that the organization is able to create a large financial base. In this case, the value obtained above is good but there is need to utilize the more strategies in order to increase the number of assets. This will act as a security to the organization and there will be no threats of insolvency when the business is not good in the industry.

Profit margin

This is the value of money that is realized after an investment has already been established in the market. The main purpose of Kitchen Warehouse company is to maximize on its profitability in the market. Profits are important because they are invested back to the business for purposes of expansion and creation of a wide financial base for the business. In this case the business has been able to realize a good profit in the market despite the competition that they have faced in the market from other companies that are in the same line of business. The profit margin is arrived at by comparing the ratio between the net income of the company and the revenue that arises from sales. For the three years, 2014, 2015, and 2016, the net income if the company was at 62,382, 60,681, and 67,164. On the other hand, the revenue of the company for the same years was at 291,940, 307,964, and 342,251. So, this leads to a profit margin of the company for the three years to be positioned at 0.213 (21.3%), 0.195 (19.5), and 0.196 (19.6%). This is a good figure in the market that signifies a good performance. In this case, we can see that the company has been able to attain a profit margin that is significant over the years. This is an indication that the financial health of the business is at a good level. However, it is important for the company to focus on their marketing mix by incorporating more techniques and strategies that will enable them increase their profit margin. In addition, to ensure that profitability is at a higher level, there is need to ensure that expenses or any other extra cost are cut down. Costs usually reduce the revenue of the company and at the end this will affect the profitability. There are some unnecessary costs that usually do not add value to the organization hence they should be done away with.

Theories Explaining the limitations of Ratios

There are a number of theories that have discussed major shortcomings that are associated with financial ratios. In most cases ratio analysis has been criticized over time with different scholars and researchers claiming that it is not the most suitable means that should be used to measure performance in an organization. It is because there are a number of weaknesses that are associated with various ratios used to signify the performance of a company. In this regard, this explains that ratios can be misleading at times and thus the management of the company should not only depend on the ratio but also look forward on other performance metrics like the scorecard among others. In this case, the Agency theory argues that the financial ratios apply to solve matters concerning performance in an organization but do not impact as expected. In this case, the theory argues that the ratios only provide a figure that is based on book value. For example, the current ratio is arrived at by analyzing the number of assets in a company in relation to the liabilities. In this case, according to the theory, the performance of the company cannot be solely evaluating using the assets and liabilities and this cannot guarantee that the company is performing well in the industry. In addition, the theory states that financial ratios cannot speculate about the future happening in the company hence cannot be heavily relied on as a source of information about the performance of the company. For instance, if stock esteems are swelled or deterioration isn’t charged on settled resources, not exclusively will one have a hopeful perspective of gainfulness of the worry yet in addition of its money related position. So, the examiner should dependably be watchful for indications of window dressing assuming any. Proportions are an endeavor to make an examination of the past money related explanations; so, they are verifiable archives. Presently a-days keeping in see the complexities of the business, it is vital to have a thought of the plausible happenings in future.

Another theory that has been used to explain the shortcomings associated with the financial ratios is the intuitive Theory of business risk. This theory clearly points out some of the risks that a business is exposed when using the financial ratios as a metric for measuring performance in an organization. This can be dangerous to a firm especially if it does not compare with other metrics applied in accounting. The two firms’ outcomes are practically identical with the assistance of bookkeeping proportions just in the event that they take after a similar bookkeeping strategies or bases. Examination will end up plainly troublesome if the two concerns take after the diverse strategies for giving deterioration or esteeming stock. Likewise, if the two firms are following two distinct principles and strategies, an investigation by reference to the proportions would deceive. Besides, use of inbuilt offices, accessibility of offices and size of operation would influence money related explanations of various firms. Examination of budgetary proclamations of such firms by methods for proportions will undoubtedly be misdirecting. In addition, changes in value levels make correlation for different years troublesome. For instance, the proportion of offers to add up to resources would be considerably higher because of rising costs, settled resources being appeared at taken a toll and not at showcase cost. Finally, the theory argues that the financial ratio is just a single method of analysis that wholly depends on ratios only. Therefore, this implies that ratio examination is just a start and gives only a small amount of data required for basic leadership. In this way, to have an exhaustive examination of money related explanations, proportions ought to be utilized alongside different techniques for investigation. In summary, it is important to note that despite ratios being considered as flexible ways to measure performance in an organization, it is important to acknowledge the limitations that might arise when using this particular approach.

  1. Impact on Cash Conversion Cycle and on the Company’s Working Capital requirements

The management of an organization is always determined to achieve higher performance over time through the application of various means. In this case, we can see that the CFO and the COO have plans to improve their production in the market in order to reduce the number of days that the inventory is converted into cash. The cash conversion cycle refers to the performance metric that is used to evaluate the organization. It describes the health of the company over time. It measures the ability of the management to reinvest their money and produce more to sell in the market to gain the cash. Basically, as the word explains itself, this is a cycle in the company. Therefore, the decision of the company to follow this path might have some impacts on the cash cycle and the working capital requirements of the company as explained as follows. A company’s execution basically relies upon the way the firm can deal with its assets consistently. The significance of working capital administration is being thought little of by numerous which brings about inability to upgrade the possibilities of numerous organizations. A firm should oversee successfully and productively its working capital in light of the fact that the failure to deal with the working capital well may bring about decrease in gainfulness as well as prompt extreme outcome like money related emergency for the firm. In any case, it’s a matter of more prominent concern and significance that organizations deal with their working capital in a way that will prompt extreme flourishing of the organizations.

Keeping in mind the end goal to oversee working capital proficiently, a firm must know about to what extent it takes them, by and large, to change over their merchandise and enterprises into money. This period of time is formally known as the Cash Conversion Cycle. With a specific end goal to quantify how well a firm deal with its working capital, a money related execution metric called money to money cycle the idea of money change cycle is a fundamental budgetary idea. In another way, Cash change cycle is “the period of time an organization’s trade is tied up out working capital before that cash is at last returned when clients pay for the items sold or benefits rendered. Cash transformation cycle is a one of a kind budgetary execution metric that shows how a firm is dealing with their capital over the inventory network. The procedure for ascertaining money to-money requires including days of stock in addition to days of records receivable and subtracting subsequently, the quantity of days of records payable. In this manner, Cash to Cash spans material exercises with providers, generation operations, appropriation capacities, and outbound deals exercises. The money to-money metric is vital for both bookkeeping and store network administration points of view. It can be utilized for bookkeeping purposes in the assurance of firm liquidity and authoritative valuation. A shorter Cash to money cycle, suggesting that less day’s trade is tied up out working capital and not balance by free financing in the type of conceded installments, brings about greater liquidity for the firm.

  1. Critical Discussion of the CFO Rationale

Being in the management position can be challenging at times considering the vital decisions that they have to make in order to ensure that performance in the organization is improved on maintained at a higher level. In this case, the decision to

 

What is finance?

Categories of Finance Assignment help Assistance

What is finance?

In simple terms, finance is money, investment management, research, and development. It can be used to describe bank, leverage, debt, credit markets, money and investing activities. Finance is fundamentally money management and the purchase of cash. Finance includes the monitoring, development and research of financial systems and credit, banking, investment, assets, liabilities, and credit.

KEY TAKEAWAYS

Finance can be defined as money, investment and other financial instruments.

Finance can be divided into three categories: government finance, business finance, or personal finance.

Social finance and behavioral financing are two subcategories that have emerged in finance.

Finance and finance go back to the dawn of culture. Around 3000 BC, banks and loans of interest were already in existence. As early as 1000 BC, coins were in circulation.

Finance has scientific foundations, such as business and statistics. However, it also includes non-scientific aspects that are related to art.

FINANCE HAS ABUNDANTLY THREE CATEGORIES

  1. Public Finance
  2. Corporate Finance
  3. Personal Finance

It does include some new categories, such as behavioral finance, which aims to identify cognitive factors that underlie financial decisions.

Is FINANCE a SCIENCE or AN ART?

Finance as Science

Finance is clearly rooted in related scientific fields such as mathematics and statistics as a subject of study or business. Many modern financial ideas are also influenced by science and mathematics.

Finance is a science.

Finance as an Art

Despite these and other academic accomplishments having significantly improved the day-to-day operations of financial markets’, finance history is filled with instances that seem to contradict rational scientific law.

Additionally, Warren Buffett, a well-known stock-picker, has consistently outperformed the wider market over a long period of time.

In this sense, finance is also an art.

Examples of finance activities

Businesses engage in financial activities to help them achieve their economic goals and ambitions. These include transactions and events that affect the equity or long-term obligations of a business.

Financial operations include, for example, the purchase or sale of assets, organization and maintenance of accounts. Additionally, financial operations include loans and the sale of stocks or bonds.

Accounting shows financial activity on the cashflow statement. These are the third category of monetary activities. These financial activities are part of the cash flow account.

  1. Repayment of short-term loans and credit
  2. Repayment loans, long-term credit, and long-term credit
  3. Own preferred and common stock shares can be issued or recovered
  4. Cash dividends are paid on your equity

Examples of Financing Activities

Positive numbers are generated when a business borrows money for the short- or long-term and issues shares or bonds of its preferred shares or shares, and then receives cash. Positive numbers indicate that money was received and the cash equivalents were increased.

The amount of cash that a company uses to finance its short-term and long-term debts shall be reported as negative numbers. A negative number informs the reader about cash usage, which decreases the cash balance and money.

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1) CORPORATEFINANCE ASSIGNMENT HELPFUL HELP

Financial activities include corporate financing. It refers to the execution and operation of different company strategies. It addresses financing sources that include three main areas: current assets and fixed assets (tangible), as well as (intangible).

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Commonly, the public finance organization is referred to by the term “public limited corporation”. It includes schools, hospitals, and agencies.

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