Essay about Jet Task 1 Financial Analysis.

The income over the last three years has been fluctuating.. This tells us the company has an initial growth period. Sales also drop between years 7 and 8 and the gross profit margin decreased as well. This may be due to operating expenses. This leads to the prospect of stable future sales. The stakeholders are continuing to back the company and the company does predict sales will remain stable. The modest increase in sales does not show enough to recover without making adjustments to free capital.

Given the net sales in 2011 is still higher than 2010, we can assume the problem is most likely with its operating cost management. On the other hand, HH’s assets turnover rate dropping 0.30 from 2010 suggests an inefficiency of generating more sales with its increased assets in 2011.

Variable Costs. Overall the company had favorable variances in variable costs, excluding the efficiency variance. As expected, since Competition Bikes sold less than predicted, their related costs: direct materials, direct labor, manufacturing overhead and variable expenses were less than budgeted amounts showing a favorable variance. The labor and overhead revenue and spending variances however, showed unfavorable due to actual output despite the changes to the flexible budget. With the prediction of decreases costs based on sales, these costs should have also decreased. There is no further information on why these rates were high, Competition Bikes will need to look into those expenses.

Financial data from past periods of a company, provides a perspective for future outcomes. Investors give proper attention to different ratios. In this report I am analyzing the financial position and financial performance of AT & T, a US. Telecommunication Company. The objective and conclusion of this analysis will be, if is either good or not to invest in the company.

The company’s debt ratios are 54.5% in 1988, 58.69% in 1989, 62.7% in 1990, and 67.37% in 1991. What this means is that the company is increasing its financial risk by taking on more leverage. The company has been taking an extensive amount of purchasing over the past couple of years, which could be the reason as to why net income has not grown much beyond several thousands of dollars. One could argue that the company is trying to expand its inventory to help accumulate future sales. But another problem is that the company’s

Also, according to its leverage ratios, the company’s debts are not only very high, but are also increasing. Its decreasing TIE ratio indicates that its capability to pay interests is decreasing. The company’s efficiency ratios indicate that despite the fact that its fixed assets are increasingly being utilized to generate sales during the years 1990-1991 as indicated by its increasing fixed asset turnover ratio, the decreasing total assets turnover indicate that overall the company’s total assets are not efficiently being put to use. Thus, as a whole its asset management is becoming less efficient. Last but not the least, based on its profitability ratios, the company’s ability to make profit is decreasing.

The table above shows that despite the increase in sales and number of employees, cash flow has fallen by more than half, profit from operations is down and profit for the year is even lower. There is no significant change in debt. The only bright figure is the capital expenditure which according to their strategy is as a result of expansion in other regions. (Annual reports, 2011 pg 2). The CEO’s statement that “The growth of Kesko's business operations strengthened in 2011 …Profitability improved” (annual reports, 2011 pp 6) suggest that there has been worse performance in previous years. A look at previous years’ annual reports will confirm that.

Ratios Liquidity Ratios Current Ratio (CR) Quick Ratio (QR) Leverage Ratios Debt Ratio (DR) Debt to Equity (D/E) TIE Activity / Turnover Ratios ARTO DSO INVTO Profitability Ratios Gross Profit Margin (GPM) Net Profit Margin (NPM) ROA ROE 2010 Avg 2.5 1.6 0.4 0.7 14.0 10.6 34.6 7.0 0.4 0.2 0.2 0.4 Risk Analysis Able to cover short term debts; look into CA types to evaluate how quickly they can be liquidated to cover CL Able to cover short term debts; CA are heavily dependent on inventory Less dependent on money borrowed from others; using small amount of leverage; indicates strong equity position Using small amount of leverage; indicates strong equity position; should look into operational liabilities Can cover interest payments 14 times over; may indicate an inefficient use of funds 2.0 Low 1.0 Low 1.0 Low 1.0 Low 6.0 Low

The Boeing Company was formed in 1916 by William E. Boeing in Seattle, Washington. The following year they had a twenty eight person payroll which included pilots, carpenters, boat builders and seamstresses. The lowest wage was fourteen cents an hour, while the company's top pilots made two to three hundred dollars a month. When the company was short on money, William Boeing used his own financial resources to guarantee a loan to cover all wages, which was a total of about seven hundred a week. ("Boeing History," n.d)

Ms. Ringer is largely supporting operations through her line of credit versus managing costs. In review of the operating costs, overhead and administration have increased by 8% from 2008-2011 or $116,870. In addition salary dollars continue to increase from 2008-2011 by $111,150 with no efforts to flex. The other expenses are staying steady in proportion to gross revenues. There may be opportunities in these areas however salaries and overhead is the greatest opportunity to scale back costs and contribute to increased net income and ultimately positive cash flows. Flexing salaries and benefit to 44% of gross revenue and reducing overhead and expenses to 10% of gross revenue is recommended for Ms. Ringer to increase net income to $152,956 and equity to $240,214 (exhibit Operating Statements-2012 proforma).

Also, the gross profit had a lower increase(+9.67%), that means the cost of sales increased more than the revenue increase in term of percentage. There was a 13.16% rose in net operating expense as both selling and distribution costs and administrative expenses increased. One of the reasons why net operating expense increased because the firm had a programme of reinvesting for organic growth which supply chain, IT and store portfolio had improved. The rose of the net operating expense lead to a 2.13% drop in the operating

Interest Expense Rate is continuously increasing from 1992 to onward. It shows that company is paying high financial charges over short term and long term borrowings.

For the analysis we have used the historical financial data of the company, the history of the company and its financing policy, and the financial data of its competitors.

- The financial statements for the past three years show a decline trend in both the operation and return on shareholder of the company, so a closer look at the factors contributing to this decline is needed.

There are three ways we can evaluate a company’s performance. Financial, operational and overall effectiveness (Ramsey, J. R., Bahia, B. R., 2013). By looking at financial indicators such as sales growth, growth of foreign sales and return of investment one can assess if these fulfill the economic goals that the company have. When using the operational dimension, we look at non-financial elements that may influences the company’s performance. This includes market share, new products introduction, product quality etc. The last of the three, overall effectiveness, evaluates achievement of goals, perceived overall performance, perceived performance in relations to its competitors etc (Hult, Ketchen, Griffith, Chabowski, Hamman, Dykes, Pollitte, Cavusgil, 2008).