HBL Financial Statement

Financial analysis: Haefren Baum is funding itself from bank loans, mortgages, and their supplier’s flexible credit. The major change in consumer demand, from the economic bust, in 1993, lead to lower sales and extended account payable days. The cash flow statements are unhealthy as they negative operating cash flows generated from a negative net income and high account payables. The company is far from liquid with 1.26 quick ratio in 1995 and high account payable days. The company has profitability issues, which is seen in their decrease in operating profit and negative return on equity. As stated earlier this is due to their decline in sales, tough economic conditions, and increased competition. They are highly leveraged company, which is risky. Their debt to equity ratio jumped from 5.84 in 1993 to 8.22 in 1995, which means it is hard for them to sustain that debt with their low equity. For

Company does not have big amount of debt to pay. In 1994 its outstanding debt is only 36.4% of its total assets which is a healthy rate. Its current assets are higher 2.4 times than its current liability. Also company has no outstanding interest to pay. Price earning ratio of 42.80 is highest among the competitors. (Pls. see exhibit 2, 3&4) for details. So we can safely conclude that BBBY has great potential to sustain.

To analysis financial statements there are various tools. Ratio analysis is one of them. In ratio analysis we establish relationship between two or more items of financial statements and derive some vital information about the business.

The results of Haefren Baum’s common-size balance sheet from 1993-1995 states that the company has a short-term outlook on its assets because it ranges from 65% to 85%; compared to its 67% total long-term liability holdings. Haefren Baum’s account receivable payments from its customers have also slowed down due to the slower economy. The slow down also forced Haefren Baum to extend more favorable credit terms to its customers because they wanted to keep their sale volume up as well. This decision added to the slowing down of their income and to the extension of their account receivable days. Haefren Baum’s cash flow from operating activities became negative in 1994 due to the Germany’s economic downturn that occurred the year prior. However, it then made a 100% recover from its previous showing in 1995, while remaining negative. Time interest earned took a noticeable drop of 4.3 in 1993 to 0.96 in 1994. This indicated that the company was unable to meet the requirement of its fixed interest from its operating earnings. The DuPont analysis stated that net profit margin was the primary contributor of the firm’s return. From 1993-1995, the net profit margin fell from 101.35% to -5.73%, indicating that the company’s financial problems were

This represents a 7% increase in stock price. Further, the additional leverage and return of excess cash to shareholders will significantly increase ROE. If the market determines that an 80% debt capital structure is feasible for BBBY, then we will expect further capital gains as investors applaud shareholder friendly policies and re-examine EPS estimates. However, if top line growth and same store sales growth continue to trend downward, investors may become skeptical of BBBY management’s ability to continue generating over 30% EPS growth, and thus question the ability of the company to service its debt in the future.

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.

HNK’s income statement for the previous three years, along with an SW Financial Services Balance Sheet for HNK is provided below. SW Financial Services reviewed the financial statements for HNK Company and have determined that the store was operating at a net loss for the last three years. SW Financial Services has determined that an ideal current ratio to determine the liquidity of HNK Company is a 2 to 1 ratio. SW Financial Services has determined HNK’s current assets to be valued at $291,500 and its current liabilities to be valued at 5289,750. Thus, making HNK’s current ratio to be valued at 1.01%. SW Financial Services has determined HNK’s profit margin is steadily on the rise with an 8.5% increase. Additionally, SW Financial Services

Ratio analysis are useful tools when judging the performance of a company by weighing and evaluating the operating performance (Block-Hirt). There are 13 significant ratios that can separate by four main categories,

Financial statements of the company are significant for the investors who would like to venture into the business operation. It gives them the insight whether the business is making profits or it is doomed to fail;

HLF’s three-year net profit margin average is about 6.54%. The company took a hit of $1 billion short in HLF stock. Companies vision to change people’s lives by providing opportunity to improve their health and financial well-being and expand and market the company to each and every health conscious person all over the globe drives the interest to conduct the business research.

HSBC is one of the Largest Banking and Financial Services organisations in the world, shares in HSBC holdings plc are held by over 220,000 share holders in 121 countries. HSBC provides a comprehensive range of financial services to more than 100 million customers through four customers an global businesses: Personal Financial Services; Commercial banking: Global banking and Markets: private banking.

The quick ratio of 1.46 is a further analysis into the actual monetary values that are highly liquid and excluding fixed assets as part of the assets. The CFO/Avg. current liabilities also show a healthy 73%, 28% in 2004, on average of which is still higher than the industry.

HBL’s Cash Balance with treasury bank over all has an increasing trend during the analysis period in net amount and percent of total asset. This means that the bank relies more on depositing cash with treasury bank, rather than relying on its deposits to other banks.

BP showed a decline in Sales in 2014, which is mainly due to price collapse in the Oil and Gas industry. It has reduced its short-term investments to improve cash flow. Due to the liabilities and obligations of BP regarding Gulf of Mexico, oil spill its interest cost has significantly increased. EPS of BP is also significantly decreased in 2014.It has also paid a good amount of dividend in 2014 which is a positive signal

Current ratio of Company X and Y is 1.80, and 2.55 respectively. This ratio presents the proportion of current assets to current liabilities. This ratio provided a measure of degree to which current assets cover current liabilities. Since both companies have excess of current assets over their current liabilities, they met basic requirement of safety margin against uncertainty in realization of current assets and funds flows. Generally, it is suggested that a firm should have neither a very high ratio nor a very low ratio. Very high ratio implies heavy investments in current assets reflecting under utilization of the resources. A very low ratio endangers the business in to risks of not being able to pay short term requirements. Normally, it is advocated to have the current ratio as 2:1 (Baker and Powell, 2009).