Financial Analysis Starhub

With different level of the debt of the company according to Exhibit 3, we would predict by comparing to its peer Warner. Lambert Company at 32.4% debt to total capital ratio still maintain at weak AAA level. AHP had much better financial performance e.g. Earnings per Share and Return on Equity. With 50% Debt to Total Equity ratio, AHP may receive lower rating at AA level and we do not expect them to go lower than BBB rating even with 70% Debt to Total Equity

As discussed earlier, the liquidity and solvency ratios show that, although Target holds large amounts of free cash flow to deal with risk and possible acquisition, it still has a high debt to asset ratio.

I would worry that the firm might be decreasing the size of the operations. Also the firm has relied more on debt funding in the past but the incoming cash from taking on debt is going down over the last three years; however, payments for long term debt maintains. I wonder if they are struggling to obtain new debt and are reaching their limit.

Star River’s current ratio indicates that it cannot cover its current obligations totally with its current assets. Low values (less than 1), however, do not indicate a critical problem. If an organization has good long-term prospects, it may be able to borrow against those prospects to meet current obligations.

* Buy-A-Lot Company – Astro should not recognize because it has no intention to sell and credit rating upgraded from BBB to BBB+.

“Financial Statements…provide key information for internal and external decision making.” (Horgren, et al., 2015). Through analysis of the financial information of both JB Hi-Fi and Dicksmith, I have found that investing within JB Hi-fi would be a more profitable and beneficial for shareholders. Moreover not only does JB hi-fi’s financial information (Appendix 1) show that return on Shareholder’s equity is close to 48% of each dollar

Commutronics had not accumulated enough profits and had no sufficient capital reserves. The company’s registered capital was therefore very low. The withholding tax rate of

When compared with the industry, the total debt ratio of S&S Air of 0.45 is just above the industry lower quartile of 0.44. This indicates that S&S Air has less debt than the industry average and may be less likely to experience credit problems, but may not have an increase in shareholders return.

Bed, Bath and Beyond (BBBY) currently has $400 million more in cash than they need for ongoing growth and operations requirements. While the company is financially sound analysts and investors worry about the company’s capital structure decisions. Investors do not want to see that much cash on the books and worry that the current capital structure is not the most effective for the future. They prefer that BBBY change their capital structure by paying out excess cash and issuing debt. This could allow BBBY to improve their return on equity and raise earnings per share. Given the low interest rates available it seems like the perfect time for BBBY to add debt to its capital structure. Until now they

An analysis of a repurchase of stock for $400 million cash, and recapitalization to 80% debt-to-total capital by borrowing $1.27 million reveals that BBBYs return on equity will be 113%, return on assets 61% and an after tax cost of debt of 28%. ROE is > ROA and ROA > after tax cost of debt. With the 80% debt-to-total capital structure ROE exceeds the other two capital structure scenarios of no debt and 40% debt-to-total capital. While all of this looks great there are other considerations. The household and personal products industries debt to total asset ratio is 34.69% while BBBY debt to total asset ratio is at 44% ($1,270,000/$2,865,023). Increasing to this capital structure would also reduce shareholders earnings per share.

Sirius XM also proves that it can, for the most part, meet its short-term obligations by boasting a current ratio of 0.79. Sirius XM’s current ratio is relatively low because of its strong operating cash flow (over 800M). Just like the debt to equity ratio, this low current ratio can also mean a higher return on assets for Sirius XM. It should however be noted that, when I calculated the quick ratio, I took into account the quick ratio with accounts receivable (0.78) and without accounts receivable (0.32).

We … believe Deluxe is underleveraged. We believe our steady cash flows put us in a position to increase our debt level up to $700 million and still maintain a strong investment-grade rating. The use of debt will lower our overall cost of capital and as a result increase returns on capital invested. We expect that the debt will be a combination of both long- and short-term borrowings.

In terms of financial flexibility, a relatively high interest coverage ratio (ICR) of 36.8 supports the company’s ability to Flexibility take on more debt. Especially by comparing the ratio with its peers, such ratio seems to match with its risk aversion philosophy. Agency Cost of Debt

Due to high investment in fixed asset the firm also need a high amount of debt in order to cover its expenses so the smooth run of business.

The long-term liquidity risk ratio such as LT debt/Equity, D/E, and Total Liabilities to Total Assets all show a decline from year 2005 due to the repayment of debts. The interest coverage ratio also shows a healthy number of 29.45 in comparison to the industrial average of 15.04 indicating a high ability to pay out its interest expense. Such a low relative risk is not surprising due to the nature of its business depending heavily in R&D development and large intangible assets.