Assessing a Company Future Financial Health Essay

4. SciTronics’ earnings before interest and taxes (operating income) were $26000 in 2008 and its interest charges were $2000. Its times interest earned was 13 times. This represented an improvement from the 2005 level of 10 times.

2. Verify the growth rates for sales and inflation (cost of goods sold, CGS) that are described in the case. This can be calculated from the income statement (Exhibit 1). An excel sheet containing the information described in the case can be found on Blackboard. What is the formula for

Shareholder’s equity would be lower than that shown in 1982 ($318,000) because the company has to pay off interest and principal for many loans. There will be little money left for shareholder’s equity.

Medtronic 's net earnings have steadily increased from $984.0 million in 2002, to $1599.8 million in 2003, to $1959.3 million in 2004. Their total assets have increased 13.7% from $12,405.5 million in 2003 to $14,110.8 million in 2004. These measures show that Medtronic has been successful in generating profits and increasing their net assets. These measures have steadily been increasing and therefore this type of progress can reasonably be expected to persist in the future.

The Total Debt to Total Asset ratio figure for the company has show a downward trend over the last three years. Both the assets and the liabilities of the company has declined, however, the decline in the company's liabilities have declined faster then their assets. From an investor standpoint, this is good as the company is now able to take on additional debt to help support growth. This additional debt, however, must first be viewed along side the company's Times Interest Earned to ensure the company can support the debt. In a time of increased sales however, the company has been able to increase capital equipments and pay down debt which is really good sign for the company.

S&S Air’s current ratio is below the average of the Light Airplane industry and this can be an issue for the firm. To be exact, S&S Air’s current ratio was 0.7498, compared to a median of 1.43 and upper quartile of 1.89. This means that S&S Air has $0.7498 in current assets for every $1 in current liabilities. Moreover, the company’s current ratio is less than 1, which translates to its current assets being less than its current liabilities and this is clearly visible

* Current assets increased year 12 to 13 from $738,690 to $880,950, an increase of $142,260 (19.3%). It decreased year 13 to 14 from $880,950 to $740,155, a decrease of $140,795 (16.0%). This is a strength for the company as it was able to increase its current assets and operating cash flow year 12 to 14, increasing funds available for loan payments.

With the Value of Equity of RTC, we can deduct RTC’s outstanding debt of $12 million from RTC’s Value to find:

The debts to asset ratio is a measure of a company’s total liabilities divided by the total assets. It demonstrations how much of a company’s assets are funded by borrowing (source). Using the formula, Lockheed Martin had a value of 0.937 in 2015 and Boeing Co.’s value was 0.932 (Source). Therefore, 93.7% of Lockheed Martin’s and 93.2% of Boeing’s assets were funded from borrowing. As a result, these two companies

Debt equity ratio compares the relationship between liabilities with equity. It shows the level of assets funded with debt rather than equity. It also measures the ability of the company to maintain in the market in the long run. If the company has a ratio higher than the industry ratio, the company has a high probability of not being able to settle the debts (Anonymous, 2006). Stemlife’s debt to equity ratio is 11%. Thus, it should not be a problem for Stemlife to repay its debt. Stemlife should also be able to maintain in the market for long term as it has substantial assets to support its liabilities. This ratio also determines the company’s ability to obtain financing (Anonymous, 2006). There should not be a proble for Stemlife to get fund.

Cash and cash equivalents, short-term investments and marketable securities increased $1,407 million, or 7 percent, as a combined group. This increase reflects the Company 's overall cash management strategy. A majority of the Company 's consolidated cash and cash equivalents, short-term investments and marketable securities are held by foreign subsidiaries.

Investors can learn about RNA’s financial stability and operating efficiency with the help of these financial ratios. With the use of the current ratio, investors can see that RNA’s has been declining for the past three years. It went from 1.62 to 1.57. Although these numbers are below the industry average for current ratio, the declining numbers is not yet a major concern for the company. This does not mean that the company should not keep an eye on it though. This is

In this case study the given data would fall in the category of a time series because the sales figures increased over the time (years). Also in reviewing the data there is seasonal variation in the sales figures from 2006 to 2008. This category of data can be analyzed using time series methodologies. The next year’s data or projected data is dependent on the previous year’s data, so time series analysis is appropriate.

Using model (2) estimates evaluated at the mean, we can state that an increase of one percentage point in the ratio of R&D to assets, increases market value by about 0.05%. An extra patent per million dollars of R&D increases

in 2007 remained relatively high at 24.4% and 54.3%, respectively. Profit from operations was 124,068 million and maintained a rapid and steady growth. EBITDA, profit attributable to shareholders and