Corporate Finance Essay

Words: 1665
Pages: 7
Open Document
Part 1: Fianacial Ratios

After having the financial information about Deep water experts company, we have generated the financial ratios for the company for the years 2010, 2011 respectively as below and has the following comments:
Liquidity:
There is more than one ratio that measures the liquidity for a company which is included in the following table: Ratio Type | 2011 | 2010 | Liquidity | Current Ratio | 3.29 | 2.67 | Quick Ratio | 2.2 | 1.798 | Cash Ratio | 1.56 | 1.08 |

1. Current ratio: indicates a company's ability to meet short-term debt obligations.

For 2011= 3.29 and for 2010= 2.67.
From creditor's view a high current ratio is better than a low current ratio and as we can see it increased in 2011. …show more content…
3. Profit margin: indicates how well the company converts sales into profits after all expenses are subtracted out.

For 2011= 5.2 and 2010= 6.2.
The ratio is decreased which indicates that the company is making less profit in 2011 this might be due to increase in expenses.

Part 2; Benchmarking

2011 2010 | Lower Quartile | Median | Upper Quartile | Current Ratio | 3.29 | 2.67 | 0.52 | 1.43 | 1.89 | Quick Ratio | 2.2 | 1.798 | 0.21 | 0.38 | 0.62 | Cash Ratio | 1.56 | 1.08 | 0.08 | 0.21 | 0.39 | Total Asset Turnover | 1.086 | 1.16 | 0.68 | 0.85 | 1.38 | Inventory turnover | 9.3 | 12.89 | 4.89 | 6.15 | 10.89 | Receivables turnover | 23.35 | 23.37 | 6.27 | 9.82 | 14.11 | Total Debt Ratio | 0.5 | 0.417 | 0.44 | 0.52 | 0.61 | Debt Equity Ratio | 1 | 0.716 | 0.79 | 1.08 | 1.56 | Equity Multiplier | 2 | 1.716 | 1.79 | 2.08 | 2.56 | Time Interest Earned | 3.295 | 4.61 | 5.18 | 8.06 | 9.83 | Cash Coverage Ratio | 5.52 | 7.53 | 5.84 | 8.43 | 10.27 | Profit Margin in % | 5.2 | 6.2 | 4.05 | 6.98 | 9.87 | Return on Asset in % | 5.65 | 7.22 | 6.05 | 10.53 | 13.21 | Return on Equity in % | 11.3 | 12.4 | 9.93 | 16.54 | 26.15 |

After looking at the financial ratios for retail industry (Sporting Goods) as a benchmark with the ratios that we have calculated for Deep Water Experts
Show More

Related Documents: Corporate Finance Essay

Corporate Finance Paper

Avrohom Zucker Professor Goldberg December 28, 2014 Corporate Finance EBF 220 BQ VSE Corp. VSE Corp. is an American company that provides “services to create, sustain, and improve client systems, equipment, and processes”i. Its services include Supply Chain Management, Maintenance, Repair and Overhaul, Engineering Services, Training, IT Solutions, and Energy & Management Consulting. They provide these services to large companies, and governmental departments of many countries. Its biggest clients…

Words 1097 - Pages 5

Essay on Corporate Finance Intoduction

Ch. 1 Introduction to Corportae finance 1.1 What is corporate finance 1. the balance sheet model of the firm (a) Assets (On the left of the BS) * Fixed Assets: Last a long time, such as building (Tangible or Intangible) * Current Assets: Short lives, such as inventory * Capital budgeting: Process of making and managing expenditures on long-lived assets (b) Liabilities and Shareholders’ Equity (On the right of the BS) * Current Liabilities: Short term loans or obligations…

Words 1828 - Pages 8

Corporate Finance Essay

global financial and banking services company owning more than 30 million customers over Europe, Asian, Americas and Middle East, anchored in UK. RBS Group provides a wide range of services and products. The core business includes the retail banking, corporate banking, wealth, and insurance, mainly in the UK, Ireland (Ulster Bank), and US. It also provides the services in global banking and markets, and global transaction services. In 2011, the total retail and commercial business was responsible for the…

Words 3032 - Pages 13

Corporate Finance Essay

CAPM & SML The total risk to a stock can be divided into two parts. The first is the systematic rate, which is the risk associated with the market and cannot be diversified away. The second is unsystematic risk, which is the risk inherent to the stock and can be eliminated through diversification. Beta is a measure of a systematic risk of a stock. Beta describes the sensitivity of a stock’s returns to the changes in the market. As asset with a beta of zero means its return is independent of changes…

Words 310 - Pages 2

corporate finance Essay

Problem Set 2 Chapter 7: 14) Investment in stock I: x1: 60% or 0.6 Investment in stock J: x2: 40% or 0.4 S.D of return on I: δ 1 = 10% S.D of return on J: δ 2 = 20% Let variance of portfolio be δ3 a) Correlation ρ = 1.0 δ3 = (0.6)^2(10)^2+(0.4)^2(20)^2+2(0.6*0.4*1*10*20) = 196 Variance of Portfolio = 196 b) Correlation ρ = 0.5 δ3 = (0.6)^2(10)^2+(0.4)^2(20)^2+2(0.6*0.4*0.5*10*20) = 148 Variance of Portfolio = 148 c) Correlation ρ = 0 δ3 = (0.6)^2(10)^2+(0.4)^2(20)^2+2(0.6*0.4*0*10*20)…

Words 1855 - Pages 8

Corporate Finance Final Essay

Table of Contents I. Introduction 2 Company Strategy and Goals 2 Capital Allocation and Investment Appraisal Methodology 2 II. Evaluation of the Investment Appraisal Techniques for BHP Billiton 4 Evaluation of Net present Value (NPV) Method 4 Evaluation of Internal Rate of Return (IRR) Method 6 Recommendations to BHP Billiton Regarding Investment Appraisal Metrics 7 III. References 10 Introduction BHP Billiton is one of the world’s leading natural resources companies, operating in more than…

Words 3034 - Pages 13

Corporate Finance And The Financial Manager

Chapter 1 Corporate Finance and the Financial Manager  Answers to Concept Check Questions 1. What are the advantages and disadvantages of organizing a business as a corporation? Advantages Disadvantages Corporation responsible for obligations not responsible for obligations of owners More expensive to set up double taxation More borrowing power/funding articles of incorporation 2. What is the limited liability partnership (LLP)? How does it differ from a limited partnership…

Words 1015 - Pages 5

An Analysis Of Jim's Corporate Tax And Corporate Finance

is going to be discussed in the memo As JIM’s corporate tax and financial analyst, it is part of my job to be familiar with all of the laws, rules and regulations that go along with working for a C Corporation. This includes the ins and outs of what is expected as well as any and all advantages and disadvantages of this process. In this memo I will explain all of this as well as the exchange currency risks of a multinational corporation. Corporate Advantages 1. Multiple owners-this method allows…

Words 769 - Pages 4

Essay about Finance: Corporate Form

April 29,2013 Finance Chapter 1 Introduction to Financial Management 1. What are the four primary disadvantages to the sole proprietorship and partnership forms of business organization? What benefits are there to these types of business organization as opposed to the corporate form? The four primary disadvantages of a sole partnership and partnership forms of business organizations are limited lifetime, difficulty in transferring ownership, unlimited…

Words 326 - Pages 2

Advanced Corporate Finance AFC3140 Essay

I'A ADVANCED CORPORATE FINANCE STUDY GUIDE Financial Management Association of Australia (FMAA) Monash Important Notice The following notes have been prepared and provided as a skeleton (sketch) of the course for this unit. It is the responsibility of the student to make note of any changes in course content. These notes may exclude some topics and therefore be inconsistent with current faculty teaching. These notes should not be relied upon solely. These notes should only be used to provide a…

Words 2032 - Pages 9