P & G 's Financial Performance

As long as the current ratio, which takes inventories into account, is higher than 1, they do not experience any problems repaying their short-term liabilities. However, the quick ratio is smaller than 1 and has marginally decreased in 2011. Due to this Next Plc might have problems paying off their short-term liabilities if sales decreases in the next years.

Procter and Gamble Co. also know as P&G, is an American multinational consumer goods company, founded by William Procter and James Gamble. Its products include cleaning agents and personal care products. It has in its kitty global brands such as Ariel and Tide in the Fabric care segments and Head & Shoulder, Pantene and Rejoice is the Hair care segment. For this case study selects P&G Company as it has an important role in the consumer segment products. As P&G was a popular company, the financials statement shows better performance in the previous year.

The decline of inventory turnover presents the incresed possibility of inventory obsolescence which is likely to be assessed as higher business risk. In debts to equity part, the ratio in current year is much higher than that of preceeding year, which means the extent of use of debt in financing company is much higher than before. Pinnacle has used most of its borrowing capacity and has little cushion for addional debt.This action brought high business risk to Pinnacle. In addition, Pinnacle puchase more inventory in current year that that of preceeding year, and net sales are increasing also compared previous year. However, the net income is decreased significantly. These changes show expenses (maybe direct or indirect) have increased dramaticly. The company uses more expensive materials and labors to manufacure and sell products.

First of which, is the current ratio. It has been rapidly declining since 2000. To me this indicates that there is a liquidity issue. Each year their trade debt increase exceeds the increase of net income for the company. As a result, the working capital has taken a nosedive from $58,650 in 2002 to only $5,466 in 2003.

Increase in current liabilities Substantial increase in current liabilities weakened the company’s liquidity position. Its current liabilities were US$2,063.94 million at the end of FY2010, a 48.09% increase compared to the previous year. However, its current assets recorded a marginal increase of 25.07% - from US$1,770.02 million at the end of FY2009 to US$2,213.72 million at the end of FY2010. Following this, the company’s current ratio declined from 1.27 at the end of the FY2009 to 1.07 at the end of FY2010. A lower current ratio indicates that the company is in a weak financial position, and it may find it difficult to meet its day-to-day obligations.

In conclusion, financial statements of Dollar General present the increase in company’s profitability and sales over the last two years, they reduced their expenses as well. The only information that the statements do not disclose is which brands of merchandise increased their sales, and what was the cost of goods sold compared to the profit they made. Since the company was concerned about promotion of their private brand it would be helpful to know what percent of sales does their private brand make comparison to other brands. Nevertheless, the long-term liquidity risk does not look as safe. The company will have to show the stability in its ratios overtime to insure investors that it has low risk and is able to repay its debt in a long run as well as maintain stable

This information reveals that with good cost control, Lawsons’ are able to match and continue to match the industry average. Lawsons’ total operating expenses have remained constant with a slight 1.5% increase this year caused by the trade debt. This is a good indication that the trade debt truly is the company’s vast constraint on profitability. Future projections of the Lawsons’ profitability and expense ratios will help in the decision, and since the company’s ratios have remained so constant, the projections will be fairly accurate.

Overall regards to liquidity ratios, the higher the number the better; however, a too high also indicates that the firms were not using their resources to their full potential. Current ratio of 1.0 or greater shows that a company can pay its current liabilities with its current assets. JWN’s ratio increased from 2.06 in 2007 to 2.57 in 2010, and slightly decreased to 2.16 in 2011. JWN’s cash ratio increased significantly from 22% in 2007 to 80% in 2010. JWN has a cash ratio of 73% in 2011, which is useful to creditors when deciding how much debt they would be willing to extend to JWN. In addition, JWN also has moderate CFO ratio of 46%, indicating the companies’ ability to pay off their short term liabilities with their operating cash

The liquidity, profitability, and solvency ratios reveal some interesting points about Kudler Fine Food’s financial position. The liquidity ratios revealed that during 2002 and 2003, Kudler was having no trouble paying short-term debt. However, the current and acid-test (quick) ratios showed that during 2003 Kudler had an excess amount of cash that they were not investing properly. These ratios also showed that Kudler was collecting receivables and selling average inventory very quickly. The profitability ratios revealed that during 2002 and 2003, Kudler was using assets efficiently and making a decent profit. The profit margin ratio

Exhibit 6, 8, and 9 (figures in $ millions) provides selected balance sheet items for Ford, General Motors, and DaimlerChrylser. The given information indicates that Ford carries the highest amount of cash and marketable securities among the three companies. In 1999, Ford had $25,173 of cash and marketable securities while General Motors and Daimler-Chrylser have only $12,140 and $9,163. Comparing at an industry level, we as a team

Conversely, looking at the income statement for PMWL, operating income shows healthy gains of $45,862, which means the operating expenses are significantly lower in comparison to AWBL’s. However, PMWL’s cost of goods sold appear abnormally high, which makes an investor question whether this company is at it’s maturity phase in the product life cycle, and how much additional capital is necessary to bring this figure down to a number that leverages economies of scale and allows for profit maximization.

The liquidity position of a company can be evaluated using several ratios which evaluate short-term assets and liabilities and a firm’s ability to settle short-term debts (Gibson, 2011). These ratios can provide insight into a firm’s ability to repay its debts in the short term (Gibson, 2011). In turn they suggest a firm’s capacity for debt-satisfying capabilities into the future (Gibson, 2011). This paper will use financial statement data as cited in Gibson (2011) from 3M Company (3M) to better understand liquidity measures to evaluate a firm’s total liquidity position. The following paper will focus on various liquidity calculations, their meaning, and their interpretation relative to 3M. Finally, an overall view of 3M’s liquidity

The firm’s accounts receivable ratio increased from 68.71 in 2006 to 74.56 in 2010. This means that it is taking Abbott almost six days longer to collect from its customers today than it did five years ago. Furthermore, the firm’s accounts payable days has decreased from 43.72 in 2006 to 38.22 in 2010. This means that Abbott is paying its suppliers 5½ days earlier today than it did in 2006. A change in the inventory ratio from 8.01 in 2006 to 11.03 in 2010 indicates that it is taking the firm longer to sell finished goods than it used to. The increase in the accounts receivable and inventory ratios, combined with a decrease in the accounts payable ratio, indicates poor working capital management and helps to explain why the firm has increased its holdings of cash and short-term investments. To correct this, Abbott’s managers should focus on collecting cash from its customers faster and delaying payments to its suppliers. To maximize its cash position, the firm would be best served by paying its suppliers in the same amount of time as it collects payment from its customers.

GSK is the 2nd largest pharmaceutical firm in the world, and the largest in the UK by sales and profits, it is responsible for 7% of the worlds pharmaceutical market, and has its stocks listed both in UK and US (O 'Rourke, 2002). The origin of the so called blockbuster model, is partly linked with Glaxo (as it was previously known). In the early 80’s, then Glaxo brought to light their first blockbuster drug, Zantac, which was an anti-ulcer drug, which was very similar to the a pre existing drug Tagamet (first ever blockbuster) sold by Smith Kline & French, their completion at the time (MONTALBAN and SAKINÇ, 2011). The introduction of this drug, brought about an increasing sales force in the US, the company soon became dependent on the drug, because it represented a large part of their profit. In 2002, 8 blockbusters of GSK contributed to $14.240 million sales revenue, taking up 53% of its total ethical sales (Froud et al 2006). However, due to the nature of the pharmaceutical industry, the patent began to expire, in other to avoid the patent cliff, Glaxo merged with Wellcome in 1995, which ensured a growing number of sales force, and with Beecham in 2000 (Froud et al., 2006) this merger, boosted the confidence of investors, by growing the business inorganically. For Big Pharma, this block buster model is very profitable, because with the high cost of R&D, the drugs are able to generate ample profit, to cover the sunk costs

Furthermore, if an organisation does not have enough cash resources in order to settle its current liabilities, this will highlight great inefficiency with stock turnover not being sold. A good company such as Sainsbury’s we see is healthy because revenue is recognised from inventories sold – this revenue allows cash to flow in order to pay for short term and long-term liabilities. It is evident that there are insufficient cash flowing into the company from investing activities and financing activities, which are shown by the brackets.