Financial Analysis Of Radioshack's Financial Stability

The following financial report provides an analysis of the financial ratios of David Jones with its close competitor in the retail sector, Myer. The financial ratios analyzed include profitability ratios, leverage ratios, efficiency ratios and market ratios for the two companies. The analysis utilizes individual company time-series analysis as well as industry cross-sectional analysis with the aim of determining the competitiveness of David Jones relative to its close competitor Myer.

First of all, return on asset (ROA) is a ratio used to measure how efficient a company generates profit using its assets, which is the invested capital. We noticed that HH’s ROA was increasing from 2006 to 2010. However, HH’s ROA for 2011 dropped dramatically from 18.41%(year

The purpose of this paper is to advise analyze the financial statements of Dillard’s, Inc. in order to recommend whether or not my client should invest $1 million in the large retail company. I will compare the financial statements of Dillard’s, Inc. its competitor, Kohl’s Corporation. Investing in retail can be risky because a retail company’s performance is very heavily influenced by factors that have nothing to do with the actual company such as the overall performance of the economy or the weather during the holiday shopping season. There is, however, potential for profitability within the retail sector. Based on my analysis, I recommend that the client should not invest in Dillard’s, Inc. for the following reasons. First, Dillard’s has experience a decline in net income in the last three years. Second, liquidity ratios indicate that they could face possible liquidity constraints in the future. Third, long-term debt paying ability ratios indicate that the company could have trouble paying off the principal of its current debt obligations. Fourth, the profitability ratios are well below industry averages, suggesting that there are more profitable companies to invest in within the industry. And finally, Investor analysis ratios provide mixed opinion of the future performance of the company. I conclude that retail can be a profitable industry to invest in if an investor has the risk tolerance and risk capacity to withstand the uncertainty, but neither Dillard’s

The Return on Assets ratio is a basic measure of the efficiency with which TCI allocates and manages its resources (assets) to generate earnings. With a 20% projected increase in sales, for 1996, we calculated TCI’s ROA to be 12.95%, and 12.11% for 1997. Although this isn’t an extremely high ROA, TCI will be allocating its resources very wisely with the expansion of its central warehouse. If MidBank lends them the cash they need to complete this project, their central warehouse will be able to hold more tires for their increasing sales, which will then convert into profit. A true test of TCI’s ROA will be after 1998, when the warehouse is complete, so you can see just how well they can convert an investment into profit.

The focus of our case study is Target Corporation, the second largest retailer in the United States. Target exists in a very competitive environment going up against other retailers such as Wal-Mart, K-Mart (Sears), and others. During this examination, we’ll review the 2014 shareholders report to examine the fiscal health of Target Corporation. We’ll make a comparison between their main competitors Sears and Wal-Mart in order to give an accurate picture of market performance. With the recent press of Target encountering a security breach with a hacking incident and the exit from the Canadian market, Target is a good example of how a Corporation deals with adversity while maintaining

ROS Return on Sales. Return on sales (ROS) is a ratio utilized to assess the operational efficiency of a company; it is also known as a firm's operating profit margin. It is important because determines how a company is creating profits. Creditor, investors and other debt holders rely on this efficiency ratio because it accurately communicates the percentage of operating cash a company makes on its revenue. Macy’s has a return on sales on January 2016 of 6.13%, while on January 2015 was 8.47%. The decrease of 2.34% is not a good symptom because a low ROS is a sign of low efficiency (FORM 10-K, 2016).

RadioShack Corporation is an American wireless and electronics company owned by the affiliate General Wireless. It has 6,874 stores in U.S. In the same time, it has branch stores around the world, which are in Australia, Belgium, Canada, China, France, The UK and the other countries. In 1921, the company was started a small, wooden structure and selling radio equipment. In 1990s, the company had developed as a wide business company and it was focusing on marketing wireless phones, and it started to get into mainstream consumer markets and compete with big vendors like, best buy and wart-mart. In 2015, Radio Shack is facing bankrupt and it delayed rent payments to some commercial landlords. In the same time RadioShack is selling half of their stores to sprint and closing the rest of the stores. According to the article The 5 Reasons Why RadioShack Went Out of Business by Andriy Blokhin, it concludes five reasons why RadioShack failed in 2015. First, RadioShack has too many stores and RadioShack couldn’t take enough revenues

For this assignment, I select Wal-Mart Stores, Inc. Wal-Mart is an American public corporation that runs a chain of large discount department stores and a chain of warehouse stores. Wal-Mart operates more than 8,692 retail units across three business segments of retail stores worldwide that offer a wide array of general merchandise including groceries, apparel, electronics, and small appliances. In addition, the company is the world's largest retailer and grocery chain by sales and just over half of the company's sales comes from grocery items. Over 54% of the company's stores are located in the United States, with the majority

= % Capital employed The Return on Capital Employed ratio (R.O.C.E) is a hugely significant ratio, and a great deal can be taken from this ratio. The ratio relates to the profit earned in relation to the long-term capital invested in the business. The term 'capital employed' in this equation means the owners' capital plus any long term

The rate used to evaluate the efficiency of assets to generate income is called the Rate Earned on Average Assets, or Return on Investment (ROI). There was a slight decrease in 2004 from 2003, posing the figures 4.03% and 4.46%, respectively. Though it cannot be concluded in an instant that the company is inefficient in asset utilization, especially when the asset turnover rate is considered in the evaluation. As previously stated, income from discontinued operations which forms part of the net income affects the rate. Rate Earned on Average Equity likewise showed such a decrease, 13.38% in 2003 to 11.91% in 2004, or a difference of 1.47%. Investors need not panic for this immaterial reduction although it pays to investigate further, especially that the Retained Earnings balance decreased by US$138M or 26.44% from 2003 to 2004.

RadioShack Corporation is a popular electronic store within the United States of America. Within this report an assessment of RadioShack Corporation performance in the years 2004 to 2006 will be provided. This assessment looks on:

Return on Capital Employed (ROCE) is used to measure efficiency of the company generating profit from capital employed which by comparing the net operating profit to capital employed.

Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. ROA is net income divided by average assets and indicates how efficiently you are using the assets at your disposal. Your assets include current items such as cash and inventory, as well as long-lived items such as equipment, machinery, buildings and warehouses. Average assets are one-half the sum of beginning and ending assets for the period. The higher the ratio, the better you are at “milking” your assets to extract their maximum value.

Another key ratio to gauge how effectively the management is utilizing its resources is the Return on Investment (ROI) ratio. This indicator shows how successful the firm is at generating profit from its investments. Typically, its expected that whatever investment the firm makes, would be successful enough to pay for itself and make a profit. The industry standard for this sector is 3.47. The six companies in this report are all above average with Nordstrom in the lead with 15.97 and the lowest being Macy’s with only 3.55, which is barely above the industry average.

Return on Capital Employed or ROCE is an amount of returns that company expects from its capital. ROCE is calculated as net profit divided by the capital in the end of the year and is expressed as a percentage. In consequence ratio indicates how effectively invested capital is being used to produce profit.