Ratio Analysis of three different industries

LETTER OF TRANSMITTAL

9th

September 2013

Mr. Abdullah Al Mamun

North South University

Subject: Submission of report

Dear Sir,

Here is the report on the Ratio Analysis of three different industries that you have asked us

to prepare as a part of the requirement for our Fin 340 course.

In presenting this report, we have tried our level best to include all the relevant information and

explanations to make this report informative and comprehensive. It was very enriching and

exciting experience for us to prepare this report.

Our report writing skills and ratio calculating skills have improved a lot during the course of

writing this report. If you have any kind of questions or comments regarding the interpretation of

this report, please do contact us. We look forward to working under your guidance again in the

near future.

Thank You for believing in us and giving us this wonderful opportunity.

Sincerely,

Imtiaz Tariq Rahman

Numayer Ahmed Chaudhuri

Abdullah Al Rafi

Nazifa Antara Prome

Acknowledgement:

This final report on Ratio Analysis of three different industries? is an outcome

of the learning of the course FIN-340. We could have never completed this paper

without the kind help of Mr. Abdullah Al Mamun Sir. Thus, we take this

opportunity to thank our respected faculty from the core of our heart for being so

helpful, co-operative and friendly for helping us out throughout the semester and

help us to enhance our knowledge in Working Capital Management.

Contents Ratios Used ..................................................................................................................................... 1

Consumer Goods Industry .............................................................................................................. 5

Monster Beverage Corporation ................................................................................................... 5

Pepsi .......................................................................................................................................... 11

Coca Cola Company: ................................................................................................................ 17

Technology ................................................................................................................................... 23

Apple ......................................................................................................................................... 23

Dell ............................................................................................................................................ 28

IBM ........................................................................................................................................... 34

Health Care Industry ..................................................................................................................... 41

Abiomed Inc .............................................................................................................................. 41

Alere Inc .................................................................................................................................... 50

Alpha pro Inc ............................................................................................................................. 59

Property & Casualty Insurance Industry ....................................................................................... 69

Everest Re Group ...................................................................................................................... 69

American Financial Group ........................................................................................................ 78

ASPIEN ..................................................................................................................................... 88

Appendix ....................................................................................................................................... 97

Financial Statements ................................................................................................................. 97

FIN 340 Group Project | Ratios Used 1

Ratios Used Working Capital Requirement (WCR):

The working capital requirement is the minimum amount of resources that a company requires to

effectively cover the usual costs and expenses necessary to operate the business.

Working capital requirement is the difference between current operating assets (such as

receivables, inventory, prepaid and other current assets) and current operating liabilities (such as

accounts payable, operating accruals and other current liabilities). These accounts represent

spontaneous uses and sources of funds over the firms operating cycle.

The amount of working capital a company determines it must maintain in order to continue to

meet its costs and expenses. The working capital requirement will be different for each company,

depending upon many factors such as how frequently the company receives earnings and how

high their expenses are. It is calculated as:

Working capital requirement (WCR) = Accounts receivables + Inventory + Prepaid &

others CA Notes Payable Accruals & other CL

Net Liquid Balance (NLB):

NLB is the difference between current financial assets such as cash and marketable securities and

current discretionary or non spontaneous financial liabilities such as notes payable and current

maturities or long term debt.

It is a measure of liquidity rather than solvency. It examines a company's net liquid financial

assets. The net liquid assets show how much of a company's liquid assets would be left if all

current liabilities were paid off.

The more positive the net liquid balance, the greater the amount of liquid resources the firm has

to finance its working capital requirements.

If the increase in WCR is seasonal, then drawing down the net liquid balance is appropriate. And

if the increase in the WCR is permanent because of a new higher level of operations, then the


increase in should be financed with a permanent source of funds in order to maintain the firms

level of liquidity.

NLB is calculated as:

Net liquid balance (NLB) = Cash + marketable securities notes payable current

maturities of long term debt.

Working Capital Requirement / Sales (WCR/S):

It indicates the firms ability to finance additional sales without incurring additional debts. To

find the approximate amount of working capital a company should have, you should look at

working capital per dollar of sales. It determines the changes in the overall usage of cash over

time.

The working capital requirements has been standardized by dividing it by sales, developing a

working capital requirements to sales ratio, WCR/S. it is statistically different across industry

categories, indicating that industries have significantly different working capital needs. All the

other factors being constant, the greater this ratio, the greater the reliance a company will have

on external funds given a change in sales. Thus, the larger the WCR/S ratio, the less financial

flexibility and less liquidity the firm will have, because its operating cycle will require

significant investments of funds. When WCR is negative, the firms cash cycle becomes a

permanent source of financing and the positive impact on liquidity will be significant.

An alternative usage for this ratio is for budgeting purposes, since budgeted working capital

levels can be compared to the historical amount of this ratio to see if the budgeted working

capital level is sufficient.

Days Inventory Held: DIH

Days inventory held is the number of days from the time inventory was purchased to the time it

is sold after processing. This is because the delay in DIH will increase the operating cycle

duration. This may result into delay in cash conversion period if the DPO remained constant. A

low DIH will mean a better inventory management system, because if DIH is higher than


industry average or other standard, the inventory is kept idle. Money is stuck in inventory if DIH

is high.

DIH is calculated by dividing the ending inventory balance or average inventory by daily cost of

goods sold. (daily COGS is COGS/365).

DIH =Inventory

COGS365

Days Sales Outstanding: DSO

This part of the operating cycle reflects the credit and collection efficiency of the company. In

simple words, days sales outstanding represents the day when inventory is sold to the customer

on credit to the day the revenue was collected from the customer. DSO represents the average

number of days a customer takes to pay for the merchandise. The objective of any company will

be to decrease the days in DSO as much as possible.

DSO is calculated by dividing end-of-period receivables by average daily sales.

DSO =Receivables

sales365

Days Payable Outstanding: DPO

DPO shows the account payable management efficiency of the company. DPO is the time

duration measured in days from the time inventory is in stock to the moment inventory expense

is paid to the supplier. In other words, DPO shows the average days taken by the company to pay

for the inventory it bought on credit. Common perspective is that the lower the DPO, the more

efficient the company accounts payable management. A company can have higher Operating

Cycle (OC), but if DPO is less it can be said that the high OC has got little or no harmful effect

on the company.

DPO is calculated by dividing the ending Accounts Payable Balance by Average Daily COGS.

DPO =Payables

COGS365


Cash conversion period:

The cash conversion period (CCP) refers to the period of time in which a company is able to

convert its resources into cash. Resources can include such factors as labor, raw materials, and

utilities. This metric is used as part of working capital analysis. The cycle can, perhaps, be best

defined as the time it takes to collect the cash from sales after paying for the resources purchased

by the company.

The cash conversion period is important for both retailers and manufacturers as it measures how

quickly a company can convert sales into hard cash. Companies should aim to have the shortest

possible cycle as it means capital is tied up for less time, making the bottom line stronger.

Formula:

CCP = DIH + DSO DPO

Operating Cycle (OC)

Operating cycle (OC) is the summation of the days sales outstanding (DSO) and days inventory

held (DIH).

Formula:

OC = DIH + DSO

FIN 340 Group Project | Consumer Goods Industry 5

Consumer Goods Industry

Monster Beverage Corporation

Monster Beverage Corporation manufactures energy drinks, natural soft drinks, and fruit drinks

including Monster Energy, Hansen's Natural Soda, Hansen's Energy, Hansen's Junior

Juice, Peace Tea, and Blue Sky.

The company became Hansen's Juices, and later The Fresh Juice Company of California. The

plant that was opened in Los Angeles in 1946 was used until operations were moved to a new

plant in Azusa, California in 1993. The company filed for bankruptcy in 1988, and was acquired

by the California Co Packers Corporation and renamed Hansen Beverage Company. In 1998, the

company moved from Anaheim, California to Corona, California. On January 5, 2012,

shareholders agreed to change the name of the company from Hansen's Natural to Monster

Beverage Corporation, under the new ticker MNST. Shareholders also approved an increase in

the number of authorized shares of common stock to 240,000,000 shares from 120,000,000

shares.


Current Ratio:

Current assets are the assets of a business expected to be converted to cash or used up in next 12

months or within the normal operating cycle of the business. Current liabilities on the other hand

are the obligations of a business which are to be settled within next 12 months or within the

normal operating cycle.

Year 2010 2011 2012

Monster Beverage Corp 1.50 0.98 0.92

Industry average 1.40 1.08 0.98

Immediate Competitor

(Coca Cola)

1.28 1.17 1.05

Monster Beverage Corporation we can see that it has a decreasing trend from 2008 and 2011.

That means in the Company is facing a liquidity crisis and having a difficult time paying its

payables.

Quick Ratio:

The quick ratio measures a company's ability to meet its short-term obligations with its most

liquid assets. Quick ratio measures the liquidity of a business by matching its cash and near cash

current assets with its total liabilities. It helps us to determine whether a business would be able

to pay off all its debts by using its most liquid assets.

0

0.5

1

1.5

2

2008 2009 2010 2011

Monster Beverage Corp

Industry average


Year 2010 2011 2012




(Coca Cola)

0.95 0.85 0.78

Monster Beverage Corporation has a decreasing quick ratio from 2009 to 2010 but its increases

in 2011. The company is performing better than its competitor and industry average. So, the

company has the ability to pay its debts within a specific period of time.

Debt Ratio:

Debt ratio is a ratio that indicates the proportion of a company's debt to its total assets. It shows

how much the company relies on debt to finance assets. The debt ratio gives users a quick

measure of the amount of debt that the company has on its balance sheets compared to its assets.

The higher the ratio, the greater the risk associated with the firm's operation. A low debt ratio

indicates conservative financing with an opportunity to borrow in the future at no significant

risk.

Year 2010 2011 2012




(Coca Cola)

0.48 0.57 0.60

0

0.2

0.4

0.6

0.8

1

1.2

2008 2009 2010 2011


Industry average


Monster Beverage Corporation debt ratio has decrease in 2009 but increases in 2010 to 2011. In

2009 the company position was good but other than that the company position is not in a good

position because the higher the ratio, the greater the risk associated with the firm's operation.

Immediate Competitor and industry average is performing better than Monster Beverage

Corporation.

Time Interest Earned Ratio:

Times interest earned ratio is favorable meaning greater ability of a business to repay its interest

and debt. Lower values are unfavorable. A ratio of 1.00 means that income before interest and

tax of the business is just enough to pay off its interest expense. That is why times interest earned

ratio is of special importance to creditors. They can compare the debt repayment ability of

similar companies using this ratio. Other things equal, a creditor should lend to a company with

highest times interest earned ratio. It is also beneficial to create a trend of times interest earned

ratio.

Year 2010 2011 2012




(Coca Cola)

23.19 11.53 24.35

0

0.2

0.4

0.6

0.8

2008 2009 2010 2011


Industry average


Monster Beverage Corporation times interest earned ratio has increase from 2008 to 2011. So,

we can say Monster Beverage Corporation is going good because lower values is unfavorable in

times interest earned ratio.

Return on Assets (ROA):

Return on assets indicates the number of cents earned on each dollar of assets. Thus higher

values of return on assets show that business is more profitable. This ratio should be only used to

compare companies in the same industry. The reason for this is that companies in some

industries are most asset-insensitive i.e. they need expensive plant and equipment to generate

income compared to others. Their ROA will naturally be lower than the ROA of companies

which are low asset-insensitive. An increasing trend of ROA indicates that the profitability of the

company is improving. Conversely, a decreasing trend means that profitability is deteriorating.

Year 2010 2011 2012




(Coca Cola)

0.14 0.16 0.11

-2

0

2

4

6

8

10

2008 2009 2010 2011


Industry average


Monster Beverage Corporation is performing badly from both immediate competitor and

industry average. The higher the return on assets the more profitable company will be. So,

Monster Beverage return on assets ratio needs to higher to be more profitable.

-0.05

0

0.05

0.1

0.15

2008 2009 2010 2011


Industry average


Pepsi

PepsiCo serves 200 countries and is a world leader in providing food and beverage products. Its

brands consist of Frito-Lay North America, PepsiCo Beverages North America, PepsiCo

International and Quaker Foods North America. Some of PepsiCo's brands are over 100 years

old, however the company was only founded in 1965 when Pepsi-Cola merged with Frito-Lay.

PepsiCo then attained Tropicana and Gatorade when they merged with the Quaker Oats

Company. The combined retail sales average about $92 billion. The company is focused on

being the premier producer in supplying the world with convenient foods. They offer a wide

variety a food options as well, including healthy options.

PepsiCo stands out as a company because of its sustainable advantage. It includes widely known

brands, innovative products, and powerful market skills. The company also tries to benefit the

community. To make themselves a sustainable company, they have put a focus on the

environment and benefiting society with their business. Recently, PepsiCo released information

of their plan to drive sustainable water practices and improve rural water in Africa, China, India,

and Brazil.


Current Ratio:





Year 2010 2011 2012

Pepsi 1.44 1.11 0.96



(Coca Cola)

1.28 1.17 1.05

Pepsi has current ratio better than industry average and immediate competitor. So, Pepsi has

greater ability to pay of its debts in a specific period. It also shows that Pepsi not liquidly crisis.

Quick Ratio:





0

0.5

1

1.5

2

2008 2009 2010 2011

Pepsi

Industry average


Year 2010 2011 2012

Pepsi 1.00 0.80 0.62



(Coca Cola)

0.95 0.85 0.78

In 2009, Monster Beverage Corporation has a quick ratio of 1 which means that the most liquid

assets of a business are equal to its total debts and the business will just manage to repay all its

debts by using its cash, marketable securities and accounts receivable. A quick ratio of more than

one indicates that the most liquid assets of a business exceed its total debts. In 2008, 2010 and

2011 Monster Beverage Corporation has a quick ratio less than 1 indicates that a business would

not be able to repay all its debts by using its most liquid assets.

Debt Ratio:






risk.

0

0.2

0.4

0.6

0.8

1

1.2

2008 2009 2010 2011


Pepsi debt ratio is not in a good position compared to industry average. Low debt ratio indicates

conservative financing with an opportunity to borrow in the future at no significant risk.








ratio.

Year 2010 2011 2012

Pepsi -20.26 -9.23 -11.25



(Coca Cola)

23.19 11.53 24.35

0

0.2

0.4

0.6

0.8

2008 2009 2010 2011

Pepsi

Industry average

Year 2010 2011 2012

Pepsi 0.56 0.68 0.71



(Coca Cola)

0.48 0.57 0.60


Pepsi times interest ratio is not good because it is very less. Lower values are unfavorable. A

ratio of 1.00 means that income before interest and tax of the business is just enough to pay off

its interest expense.









-25

-20

-15

-10

-5

0

5

10

2008 2009 2010 2011 Pepsi

Industry average

Year 2010 2011 2012

Pepsi 0.15 0.09 0.09



(Coca Cola)

0.14 0.16 0.11


Pepsi has better return on assets compare to its immediate competitor and industry average. Thus

higher values of return on assets show that business is more profitable. From 2009 to 2011 the

company ROA has a decreasing which means company profitability is decreasing.

0

0.05

0.1

0.15

0.2

2008 2009 2010 2011

Pepsi

Industry average


Coca Cola Company:

The Coca-Cola Company, incorporated on September 5, 1919, is a beverage company. The

Company owns or licenses and markets more than 500 nonalcoholic beverage brands, primarily

sparkling beverages but also a variety of still beverages, such as waters, enhanced waters, juices

and juice drinks, ready-to-drink teas and coffees, and energy and sports drinks. It owns and

markets a range of nonalcoholic sparkling beverage brands, which includes Coca-Cola, Diet

Coke, Fanta and Sprite. The Companys segments include Eurasia and Africa, Europe, Latin

America, North America, Pacific, Bottling Investments and Corporate. On December 30, 2011,

the Company acquired Great Plains Coca-Cola Bottling Company (Great Plains) in the United

States. During the year ended December 31, 2011, the Company acquired the remaining interest

in Great Plains and Honest Tea, Inc. (Honest Tea). In December 2011, the Company acquired an

additional minority interest in Coca-Cola Central Japan Company (Central Japan). In September

2012, it acquired approximately 50% equity in Aujan Industries beverage business. In January

2013, Sacramento Coca-Cola Bottling Company announced that it had been acquired by the

Company. Effective February 22, 2013, Coca-Cola Co acquired interest in Fresh Trading Ltd.

The Companys core sparkling beverages include Coca-Cola, Sprite, Fanta, Diet Coke / Coca-

Cola Light, Coca-Cola Zero, Schweppes, Thums Up, Fresca, Inca Kola, Lift and Barq's. Its

energy drinks include Burn, Nos and Real Gold. Its juices and juice drinks include Minute Maid,

Minute Maid Pulpy, Del Valle, Simply, Hi-C, Dobriy and Cappy. The Companys other still

beverages include glaceau vitamin water and Fuze. The Companys coffees and teas include

Nestea teas, Georgia coffees, Leao / Matte Leao teas, Sokenbicha teas, Dogadan teas and

Ayataka teas. Its sports drinks include PowerAde and Aquarius. The Companys waters include

Ciel, Dasani, Ice Dew, Bonaqua / Bonaqa and Kinley.


Current Ratio:





Year 2009 2010 2011

Coca Cola 1.28 1.17 1.05



(Pepsi)

1.44 1.11 1.96

Coca Cola current ratio is lower than both industry average and immediate competitor. The

company might be having difficulty paying off its debts.

Quick Ratio:





0

0.5

1

1.5

2008 2009 2010 2011

Coca Cola

Industry average


Year 2009 2010 2011

Coca Cola 0.95 0.85 0.78



(Pepsi)

1.00 0.80 0.62

Coca Cola has a quick ratio of less than one indicates that a business would not be able to repay

all its debts by using its most liquid assets. A quick ratio of 1.00 means that the most liquid

assets of a business are equal to its total debts and the business will just manage to repay all its

debts by using its cash, marketable securities and accounts receivable.

Debt Ratio:






risk.

Year 2009 2010 2011

Coca Cola 0.48 0.57 0.60



(Pepsi)

0.56 0.68 0.71

0

0.2

0.4

0.6

0.8

1

1.2

2008 2009 2010 2011

Coca Cola

Industry average


Coca Cola has lower debt ratio than both industry average and immediate competitor. Coca Cola

debt ratio is in good position because lower value is preferable. Higher value indicates that

higher portion of company's assets are claimed by it creditors which means higher risk in

operation since the business would find it difficult to obtain loans for new projects.








ratio.

Year 2009 2010 2011

Coca Cola 23.19 11.53 24.35



(Pepsi)

-20.26 -9.23 -11.25

0

0.2

0.4

0.6

0.8

2008 2009 2010 2011

Chart Title

Coca Cola

Industry average


Coca Cola has times interest ratio more than industry average and immediate competitor. Coco

Cola has a higher time interest ratio which is favorable. That income before interest and tax of

the business is just enough to pay off its interest expense.









Year 2009 2010 2011

Coca Cola 0.14 0.16 0.11



(Pepsi)

0.15 0.09 0.09

-5

0

5

10

15

20

25

30

2008 2009 2010 2011

Coca Cola

Industry average


Coca Cola has a higher return on assets from both industry average and immediate competitor.

Coca Cola has increasing trend return on assets which indicates that the profitability of the

company is improving.

0

0.05

0.1

0.15

0.2

2008 2009 2010 2011

Coca Cola

Industry average

FIN 340 Group Project | Technology 23

Technology

Apple

Company Overview

Apple Inc., formerly Apple Computer, Inc., is an American multinational corporation headquartered in

Cupertino, California that designs, develops, and sells consumer electronics, computer software and

personal computers. Its best-known hardware products are the Mac line of computers, the iPod music

player, the iPhone smartphone, and the iPad tablet computer. Its consumer software includes the OS X

and iOS operating systems, the iTunes media browser, the Safari web browser, and the iLife and iWork

creativity and production suites.

The company was founded on April 1, 1976, and incorporated as Apple Computer, Inc. on January 3,

1977. The word "Computer" was removed from its name on January 9, 2007, the same day Steve Jobs

introduced the iPhone, reflecting its shifted focus towards consumer electronics.

Apple is the world's second-largest information technology company by revenue after Samsung

Electronics and the world's third-largest mobile phone maker after Samsung and Nokia. Fortune

magazine named Apple the most admired company in the United States in 2008, and in the world from

2008 to 2012. However, the company has received criticism for its contractors' labor practices, and for

Apple's own environmental and business practices.

As of May 2013, Apple maintains 408 retail stores in fourteen countries as well as the online Apple Store

and iTunes Store, the latter of which is the world's largest music retailer. Apple is the largest publicly

traded corporation in the world by market capitalization, with an estimated value of US$415 billion as of

March 2013. As of Sept 29 2012, the company had 72,800 permanent full-time employees and 3,300

temporary full-time employees worldwide. Its worldwide annual revenue in 2012 totalled $156

billion.[4] In May 2013, Apple entered the top ten of the Fortune 500 list of companies for the first time,

rising 11 places above its 2012 ranking to take the sixth position.


Interpretations for Apple Inc. Company financials

Net Liquid Balance:

Net liquid balance for Apple Inc. is increasing in the recent years 2010 and 2009. In year 2010

company had a sound liquidity and it fall in the following years from the middle of 2011

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

2009 2010 2011 2012

NLB

NLB

2010 2011 2012

Cash and Cash

Equivalents

$9,815,000 $11,261,000 $5,263,000

+Market

securities

- - -

-Notes Payable

Short-Term

Debt / Current

Portion of

Long-Term

Debt

$2,867,000 $851,000 $663,000

NLB $6,948,000 $10,410,00 $4,600,00

2010 2011 2012

NLB $6,948,000 $10,410,00 $4,600,00


company got the highest NLB of$6,948,000. Holding too much idle balance is bad as company

lose investment opportunity. Thus the company invested in short term loan in the following

years. In recent years, company holding some handsome amounts of NLB. So the NLB position

is good in recent years.

Working Capital Requirements

2012 2011 2010

Accounts

receivables

$21,275,000 $13,731,000 $11,560,000

+ Inventory $791,000 $776,000 $1,051,000

Prepaid &

others CA

$6,458,000 $4,529,000 $3,447,000

Notes

Payable

_ _ _

Accruals &

other CL

$5,953,000 $4,091,000 $2,984,000

WCR $22,571,000 $14,945,000 $13,074,00

WCR for Apple Inc. shows a decreasing trend over the years 2012 to 2010. This is happening

because sales for Apple Inc. are decreasing during those years. Net sales reflect the change in

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

2012 2011 2010 2009

WCR

WCR

2012 2011 2010

WCR $22,571,000 $14,945,000 $13,074,00


WCR. As we see from year 2010 to 2012 sales falls as a result WCR also falls. Again in the

middle of year 2010 sales increased and thus the WCR also increased.

Working Capital Requirements/Sales (WCR/S):

WCR/S is more or less same in the recent years 2012and 2011. Then we see an increase in 2010

and backwards till 2009, again a slight fall in 2010 and falls continues till 2009. This ratio shows

companys dependency on external funds and also talks about firms liquidity. Thus we can see in

the year2012and 2011 this ratio is higher, as a result WCR is high in those year indicating

companys OC needs a higher fund. In those year where wcr/s is less indicates firm is generating

cash from its cash cycle thus we see impact on NLB on those years where NLB is negative.

0

0.05

0.1

0.15

0.2

0.25

2012 2011 2010 2009

WCR/S

WCR/S

2012 2011 2010

WCR $22,571,000 $14,945,000 $13,074,00

Sales /revenue $156,508,000 $108,249,000 $65,225,000

WCR/S 0.144 0.138 0.200


DIH, DSO, DPO, OC, CCP:

2012 2011 2010 2009

DIH 3.286 4.396 9.701 6.466

DSO 49.616 46.299 64.689 52.676

DPO 135.407 135.273 163.738 134.344

OC 52.902 50.695 74.39 59.142

CCP -82.505 -84.578 -89.348 -75.02

In the year 2012, on an average, it was that the inventory remains idle. It measures the number of

days between the receipt of an item until it is actually sold to the customer or the average number

of days inventory sits idle.

Overall, we can say that its DSO has been decreased from the year 2009 to 2012. The decreased

DSO indicates that they are taking less time to take the payment from their creditors. In the year

20112, on an average, it took to make the payment to the creditors. The greater this number, the

slower the payables turnover and the larger the firm is taking to pay its suppliers. Its important

for the financial managers to control the payables so that appropriate cash discounts are not lost

and that full term payables are paid by the desired time. The rapidly increasing DPO indicates

that payments for outstanding payables are being paid slowly. From the year 2009 to 2012, it has

been decreased.

-300

-200

-100

0

100

200

300

400

500

DIH DSO DPO OC CCP

2010

2011

2012


Dell

Dell Inc. (formerly Dell Computer) is an American multinational computer technology corporation based

in Round Rock, Texas, United States, that develops, sells, repairs and supports computers and related

products and services. Bearing the name of its founder, Michael Dell, the company is one of the largest

technological corporations in the world, employing more than 103,300 people worldwide. Dell is listed

at number 51 in the Fortune 500 list. In 2012 it was the third largest PC vendor in the world after HP and

Lenovo.

Dell sells personal computers, servers, data storage devices, network switches, software, computer

peripherals, HDTVs, cameras, printers, MP3 players and also electronics built by other manufacturers.

The company is well known for its innovations in supply chain management and electronic commerce,

particularly its direct-sales model and its "build-to-order" or "configure to order" approach to

manufacturingdelivering individual PCs configured to customer specifications. Until a few years ago

Dell was mainly a pure hardware vendor, but with the acquisition of Perot Systems Dell entered the

market for IT services and additional acquisitions in storage and networking systems allow the company

to offer complete solutions for enterprise customers compare to their original portfolio of computers

only.

Dell is the sixth largest company in Texas by total revenue, according to Fortune magazine. It is the

second largest non-oil company in Texas behind AT&T and the largest company in the Greater Austin

area.

On February 5, 2013 Dell announced a leveraged buyout by founder Michael Dell and Silver Lake

Partners, with additional funding from Microsoft. The deal is pending shareholder approval as of March

2013.


Interpretations for DELL Company financials

Net Liquid Balance:

As it can be seen that, net liquid balance over the year has got an increasing pattern, in 2011,

NLB of Dell was around$13,062,000 which started to decrease from 2011 and onwards 2013..

This indicates that the company do not maintained much liquid balance letting go of investment

opportunities.

$0

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

2013 2012 2011 2010

NLB

NLB

2013 2012 2011 2010

Cash and Cash

Equivalents

$12,569,000 $13,852,000 $13,913,000 $10,635,000

+Market

securities

- - - -

-Notes Payable - - - -

Short-Term

Debt / Current

Portion of

Long-Term

Debt

$3,843,000 $2,867,000 $851,000 $663,000

NLB $8726000 $10,985,000 $13,062,000 $9,972,000


Working capital requirement (WCR)

2012 2011 2010

Accounts

receivables

$9,803,000 $10,136,000 $8,543,000

+ Inventory $1,404,000 $1,301,000 $1,051,000

Prepaid &

others CA

$3,423,000 $3,219,000 $3,643,000

Notes Payable

Accruals &

other CL

$3,738,000 $3,158,000 $3,040,000

WCR $10,892,000 $11,498,000 $10,197,000

2012 2011 2010

WCR $10,892,000 $11,498,000 $10,197,000

The working capital requirement of a company has direct relationship with the sales of the

company. But in this case the relationship is not that strong, a high sale hardly reflects high

WCR. This will be clearer in the next graph. In DELL, the WCR is fluctuating over years. But

$9,500,000

$10,000,000

$10,500,000

$11,000,000

$11,500,000

$12,000,000

2013 2012 2011 2010

WCR

WCR


even in this fluctuation, the WCR is getting stable in recent year 2013. As the graph reflects,

WCR was lowest in 2010 and highest in 2011. In the latest year (2013) WCR was around

$10,818,000.


2012 2011 2010

WCR $10,892,000 $11,498,000 $10,197,000

sales $62,071,000 $61,494,000 $52,902,000

(WCR/S) 0.175 0.187 0.193

As mentioned before, the WCR relationship with sales is not that strong. If it would have been

the case, the graph would have been somewhat constant. In the figure above, we see fluctuations.

In year 2010 the WCR/S ratio was 0.193, which means that the requirement rate was 19.3% of

the sales. Over the years, this rate fluctuated from 19.3% to 18.9%.the highest requirement was

in 2013 and the lowest was in 2012 being only 17.5%. This low rate in 2012 can also be related

with the high NLB in 2012.

0.165

0.17

0.175

0.18

0.185

0.19

0.195

2013 2012 2011 2010

(WCR/S)

(WCR/S)


DIH, DSO, DPO, OC AND CCP:

2012 2011 2010

DIH 10.619 9.479 8.749

DSO 57.645 60.162 58.943

DPO 116.443 112.739 127.605

OC 68.286 69.641 67.692

CCP -48.179 -43.098 -59.913

We know summation of DIH and DSO is OC, the fluctuation in both DIH and DSO will show

the fluctuation in OC. The above figure shows that DIH is fluctuating over the years but DSO is

less fluctuating. These movements of DHI and DSO are in the same direction kept OC less

-200

-100

0

100

200

300

400

DIH DSO DPO OC CCP

2010

2011

2012


fluctuating. In 2010, DIH of Dell is lowest, which is good for the company. The figure shows

that CCP was lowest in 2003 this is because the companys DPO was highest in 2003. So far

there is no trend in the variables, but its good that companys DPO and DIH was high in recent

years. It will be better for Dell if it maintained a specific trend or standard in its cash conversion

period. Right now it is very unpredictable.


IBM

The International Business Machines Corporation (commonly referred as IBM) is an American

multinational technology and consulting corporation, with headquarters in Armonk, New York,

United States. IBM manufactures and markets computer hardware and software, and offers

infrastructure, hosting and consulting services in areas ranging from mainframe computers to

nanotechnology.

The company was founded in 1911 as the Computing Tabulating Recording Company (CTR)

through a merger of three companies: the Tabulating Machine Company, the International Time

Recording Company, and the Computing Scale Company. CTR adopted the name International

Business Machines in 1924, using a name previously designated to CTR's subsidiary in Canada

and later South America. Securities analysts nicknamed IBM Big Blue in recognition of IBM's

common use of blue in products, packaging, and logo.

In 2012, Fortune ranked IBM the No. 2 largest U.S. firm in terms of number of employees

(433,362), the No. 4 largest in terms of market capitalization,[8] the No. 9 most profitable, and

the No. 19 largest firm in terms of revenue. Globally, the company was ranked the No. 31 largest

in terms of revenue by Forbes for 2011.Other rankings for 2011/2012 include No. 1 company for

leaders (Fortune), No. 1 green company worldwide (Newsweek), No. 2 best global brand

(Interbrand), No. 2 most respected company (Barron's), No. 5 most admired company (Fortune),

and No. 18 most innovative company (Fast Company).

Interpretations for IBM Inc. Company financials


Net Liquid Balance:

2012 2011 2010

Cash and Cash

Equivalents

$10,412,000 $11,922,000 $10,661,000

+Market securities - - -

-Notes Payable - - -

Short-Term Debt /

Current Portion of

Long-Term Debt

$9,181,000 $8,463,000 $6,778,000

NLB $1,231,000 $3,459,000 $3,883,000

As it can be seen that, net liquid balance over the year has got an fluctuations pattern from 2009

to 2012, NLB of Dell was around$1,231,000which started to decrease from 2009 and onwards

2010.However it was stable throughout 2010 to 2011,again it started to decrease.. The increases

are because the firms N/P and CMLTD relatively decrease compared to the respective years

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

2012 2011 2010 2009

NLB

NLB


cash and equivalents. This indicates that the company do not maintained much liquid balance

letting go of investment opportunities.

Working capital requirement (WCR)

2012 2011 2010

Accounts

receivables

$31,993,000 $31,162,000 $29,789,000

+ Inventory $2,287,000 $2,595,000 $2,450,000

Prepaid & others

CA

$4,024,000 $5,249,000 $4,226,000

Notes Payable

Accruals &

other CL

$11,952,000 $12,197,000 $11,580,000

WCR $26,352,000 $24,473,00 24,885,000

The working capital requirement of a company has direct relationship with the sales of the

company. There is a fluctuations in wcr ,as it was stable through 2009 and 2010,But after 2010

there is a decline and it dropped rapidly in 2011 which was$24,473,00 ,in the following year

2012 it started to increase As the graph reflects, WCR was lowest in 2011 and highest in 2012. In

the latest year (2012) WCR was$26,352,000

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

2012 2011 2010 2009

WCR

WCR



2012 2011 2010

WCR $26,352,000 $24,473,00 $24,885,000

sales $104,507,000 $106,916,000 $99,870,000

WCR/S 0.252 0.229 0.249

From 2009-2012 there were ups and down but it was stable and consistent, from 2010 a

decrease, from 2011-2013 a small increase, from 2011-2012 an increase.. Overall, the WCR/S

ratio was consistent at 0.252.. The ratio was stable because there were no great changes in the in

sales of the four-year period.

0.215

0.22

0.225

0.23

0.235

0.24

0.245

0.25

0.255

2012 2011 2010 2009

WCR/S

WCR/S


The higher the WCR/S ratio, the less financial flexibility and less liquidity the company will

have as its operating cycle will require more investments of funds.

2012 2011 2010

DIH 19.034 16.682 16.6041

DSO 111.738 106.38 108.871

DPO 151.44 137.983 150.481

OC 130.772 123.062 125.475

CCP -20.668 -14.921 -25.006

Here we can see that there was fluctuations in both DIH and DSO and this will show the

fluctuation in OC. The above figure shows that DIH is fluctuating over the years but DSO is less

fluctuating. These movements of DHI and DSO are in the same direction kept OC less

fluctuating. In 2012, DIH of IBM is lowest, which is good for the company. The figure shows

that CCP was lowest in 2009 this is because the companys DPO was highest in 2009. So far

there is no trend in the variables, but its good that companys DPO and DIH was lower in recent

years.. Right now it is very unpredictable.

-100

0

100

200

300

400

500

DIH DSO DPO OC CCP

2010

2011

2012


Industry Comparison

Net Liquid Balance

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

WCR for Apple

WCR for DELL

WCR for IBM

2009

2010

2011

2012 2011 2010

NLB for

IBM

$1,231,000 $3,459,000 $3,883,000

2012 2011 2010

NLB for DELL $10,985,000 $13,062,000 $9,972,000

2010 2011 2012

NLB for

Apple

$6,948,000 $10,410,00 $4,600,00

2012 2011

WCR for

Apple

$22,571,000 $14,945,000 $13,074,00

WCR for

DELL

$10,892,000 $11,498,000 $10,197,000

WCR for

IBM

$26,352,000 $24,473,00 $24,885,000


2012 2011 2010

WCR/S for IBM 0.252 0.229 0.249

(WCR/S) for Dell 0.1899 0.175 0.187

WCR/S 0.144 0.138 0.20

In comparing the industry as a whole we have graphed NLB, WCR, WCR/S, OC, and CCP.

From here it is viewed that more or less all the companies are maintaining similar NLB, WCR,

WCR/S, OC, and CCP in the norm.

01000200030004000500060007000

WCR/S for IBM (WCR/S) for Dell

WCR/S

FIN 340 Group Project | Health Care Industry 41

Health Care Industry

Abiomed Inc

ABIOMED, Inc. develops, manufactures, and markets cardiovascular products. The Company's

BVS-5000 is a cardiac assistance device for patients with reversible heart failure. ABIOMED is

also developing its AbioCor implantable replacement heart, which is intended to extend the lives

of patients with irreversible end- stage heart failure.

Abiomed (NASDAQ: ABMD) is a pioneer and global leader in healthcare technology and

innovation, with a mission of RECOVERING HEARTS AND SAVING LIVES. Abiomed CEO,

Chairman, and President, Michael R. Minogue, has focused the companys efforts on developing

ground-breaking technologies designed to assist or replace the life-sustaining pumping function

of the failing heart. The Companys portfolio of products and services offer healthcare

professionals an array of choices across a broad clinical spectrum. From the worlds first total

replacement heart to the Worlds Smallest Heart Pump, 1/100th the size of the heart with rapid

and simple insertion, Abiomed is dedicated to finding ways to bring the most advanced and

beneficial technology to patients and physicians.


Measures of liquidity

Liquidity ratio measures the companys ability to generate cash to meet its immediate need. One

of the most universally known ratios, which reflect the Working Capital situation, indicates the

ability of a company to pay its short-term creditors from the realization of its current assets and

without having to resort to selling its fixed assets to do so.

Year 2012 2011 2010

Current Ratio 3.95 3.79 3.23

ABIOMED, Inc. current ratio in 2012 is 3.95 and 2011 is 3.79. This means current asset of the

company is 3.95 times more than its current liabilities, and this amount of current asset is good

for the company, its shows that company has enough asset for meet the short term liabilities and

its also use its asset perfectly.

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

2010 2011 2012


Quick Ratio:

Year 2012 2011 2010

Quick Ratio 3.68 3.46 3.02

Quick Ratio of ABIOMED, Inc. shows that in 2012 the company has 3.68 times ability to meet

its current liabilities. In 2011 company has 3.46 times current liabilities, Its improve than 2011.

In 2011 the company needs to increase it and the company and now the company is good

position.

0

0.5

1

1.5

2

2.5

3

3.5

4

2010 2011 2012


Working capital to net sales ratio

Working capital per dollar of sales is a financial ratio that tells you how much money a

company needs to keep on hand supporting its operations. Typically, the lower the figure, the

better

Year 2012 2011 2010

Working capital to sales 0.713 .616 0.541

ABIOMED, Inc. working capital net sales in 2012 was 0.713 this means company needs money

0.713 times than it sales, in 201 it was 0.616 .

Debt to Asset Ratio:

The debt to asset Ratio is the percentage of total debt financing the firm uses as compared to the

presentence of the firms total assets.

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

2010 2011 2012


Year 2012 2011 2010

Debt to Asset 0.63 0.56 0.37

This companys debt to asset ratio is 0.63 this means the company 63% is debt financing in 2011

it was 56% so the debt financing is increase for the company.

Debt to Equity Ratio:

The Debt to Equity Ratio measures of relationship between the capital contributed by the creditor

and the capital contributed by the stockholder.

2012 2011 2010

Debt to Equity 1.07 0.74 0.51

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

2010 2011 2012

0

0.2

0.4

0.6

0.8

1

1.2

2010 2011 2012


Companys debt to equity ratio in 2012 was 1.07 this means the companys equity is 1.07 times

than its debt. In 2011 it was 0.74 times, so it increases in 2012 which is good for the company.

Inventory turnover

Inventory Turnover Ratio is one of the efficiency ratios and measures the number of times, on

average, the inventory is sold and replaced during the fiscal year. Its measures company's

efficiency in turning its inventory into sales. Its purpose is to measure the liquidity of the

inventory.

Year 2012 2011 2010

Inventory Turnover 8.15 7.51 6.92

This measure is one part of the cash conversion cycle, which represents the process of turning

raw materials into cash. The days sales of inventory are the first stage in that process. The

other two stages are days sales outstanding and days payable outstanding. The first measures

how long it takes a company to receive payment on accounts receivable, while the second

measures how long it takes a company to pay off its accounts payable.

6.8

7

7.2

7.4

7.6

7.8

8

8.2

8.4

2010 2011 2012


Year 2012 2011 2010

Daily Inventory held 110 124.71 140.87

ABIOMED, Inc. has daily inventory held in 2011 was 124.71means, its inventory takes average

124.71days to turn into cash and in 2010 it takes 140.87 days. So it increase in 2011 is a good

signal for the company.

Day sales Outstanding

Days Sales Outstanding (DSO) is the number of days it takes to collect your receivables in a

given amount of time. It is an important financial indicator as it shows both the age of a

companys accounts receivable and the average time it takes to turn those receivables into cash.

DSO reveals how many days worth of sales are outstanding and unpaid within a specific period.

Year 2012 2011 2010

Days sales outstanding 48.49 55.52 63.57

0

20

40

60

80

100

120

140

160

2010 2011 2012


ABIOMED, Inc. day sales outstanding in 2012 are 48.49 it shows its takes average 48.49days to

collect its receivables. In 2011 it was 55.52 days so the amount of days decrease and its a good

sign for the company.

Days payable outstanding

The average amount of time it takes a company to pay its account payable. A companies

accounts payable are short term liabilities resulting from purchases the company has made on

credit.

Year 2012 2011 2010

Days payable outstanding 102.09 104.25 106.45

ABIOMED, Inc. Days payable outstanding in 2011 is 104.25means it takes 104 days to pay its

payable. In 2010 it takes 106 days, company takes less time to pay its payables and less time to

collect its receivables and its a good sign for the company.

Operating cycle:

The average time between purchasing inventory and receiving cash proceeds from its sales.

101.5

102

102.5

103

103.5

104

104.5

105

105.5

106

106.5

107

2010 2011 2012


Year 2012 2011 2010

Operating Cycle 54.6 70.4 201

ABIOMED, Inc. Operating Cycle in 2011 is 70.4means it takes average 70 days to purchase

inventory and take cash from sales the inventory. In 2010 it takes average 201 days and now it

takes 70 days so its good for the company.

0

50

100

150

200

250

2010 2011 2012


Alere Inc

Alere, Inc. offers patient diagnosis, monitoring and health management services. The Company

produces consumer and professional medical diagnostic products, and remotely monitors patients

for pre-eclampsia, and patients who are prescribed Warfarin for atrial fibrillation.

We are connected health. We give people the tools to confidently manage their own health, no

matter where they are, and reinforce the connection to their doctor. If they are sick, they are

improving; if they are healthy, they stay well. We are healthcare reform in practice.

Values & Beliefs

Empowering individuals to take charge of their own health at home. Our primary areas of focus

are cardiology, infectious disease, womens health, oncology and toxicology.

Quality Standards

With professional and consumer offerings in over 100 disease categories, Alere delivers the

widest range of services and solutions.

Corporate Responsibility

Our senior leaders and Board of Directors believe that managing the company in a transparent,

ethical manner enhances our ability to generate sustainable, long-term growth and create value

for our shareholders.





ability of a company to pay its short-term creditorsss from the realisation of its current assets and


Year 2012 2011 2010

Current Ratio 2.81 2.071 1.525

Alere, Inc. current ratio in 2011 is 2.071,and 2010 is1.525 this means current asset of the

company is 2.071times more than its current liabilities, and this amount of current asset is good

for the company, its shows that company has enough asset for meet the short term liabilities and

its also use its asset perfectly.

0

0.5

1

1.5

2

2.5

3

2010 2011 2012


Quick Ratio:

Year 2012 2011 2010

Quick Ratio 2 1.55 1.196

Quick Ratio of Alere Inc. shows that in 2012 the company has 2.81 times ability to meet its

current liabilities. In 2011 company has 2.071 times current liabilities, its improve than 2011. In

2011 the company needs to increase it and the company and now the company is good position.




better

Year 2011 2011 2010

Working capital to sales 0.410 0.280 0.191

0

0.5

1

1.5

2

2.5

2010 2011 2012


Alere, Inc. working capital net sales in 2012 was .0.410 this means company needs money

0.410times than it sales, in 2010 it was 0.191.this both are good.




Year 2012 2011 2010

Debt to Asset 0.97 0.443 0.203

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.45

2010 2011 2012

0

0.2

0.4

0.6

0.8

1

1.2

2010 2011 2012


This companys debt to asset ratio is .97 this means the company 97% is debt financing. In 2010





Year 2012 2011 2010

Debt to Equity 3.69 1.258 0.428

Companys debt to equity ratio in 2012 was 3.69 this means the companys equity is 3.69 times


0

0.5

1

1.5

2

2.5

3

3.5

4

2009 2010 2011 2012


Inventory turnover




inventory.

Year 2012 2011 2010


Alere Inc. has inventory turnover ratio in 2012 is 2.91 it shows, the inventory is 2.91 times

sold and replaced. In 2011 it was 3.5625. It increased in 2012 so its good for the company.

Daily inventory Held:






Year 2012 2011 2010

Daily Inventory held 125.30 102.45 83.75

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

2010 2011 2012


Alere, Inc. has daily inventory held in 2011 was 102.45means, its inventory takes average

102.45days to turn into cash and in 2010 it takes 84 days. So it increase in 2012 is a good signal

for the company.






Year 2012 2011 2010


0

20

40

60

80

100

120

140

2010 2011 2012


Alere, Inc. day sales outstanding in 2012 are 0.215 it shows its takes average 0.215 days to

collect its receivables. In 2011 it was 0.199 days so the amount of days decrease and its a good

sign for the company.




credit.

Year 2012 2011 2010


Alere, Inc. Days payable outstanding in 2011 is 49.627means it takes 50 days to pay its payable.

In 2010 it takes 41 days, company takes less time to pay its payables and less time to collect its

receivables and its a good sign for the company.

0.18

0.185

0.19

0.195

0.2

0.205

0.21

0.215

0.22

2010 2011 2012


Operating cycle:


Year 2012 2011 2010

Operating Cycle 127.40 103.43 83.97

Alere, Inc.Operating Cycle in 2011 is 103.43 means it takes average 103 days to purchase

inventory and take cash from sales the inventory. In 2010 it takes average 83 days and now it

takes 103 days

0

10

20

30

40

50

60

70

2009.5 2010 2010.5 2011 2011.5 2012 2012.5

0

20

40

60

80

100

120

140

2009.5 2010 2010.5 2011 2011.5 2012 2012.5


Alpha pro Inc

Alpha Pro Tech, Ltd. develops, manufactures, and markets disposable protective apparel and

consumer products. The Company sells its products primarily under the Alpha Pro Tech name to

the medical, dental, industrial, clean room, consumer, food service, and pet markets.

Alpha ProTech

Alpha Pro Tech is in the business of protecting people, products and environments. We

accomplish this by developing, manufacturing and marketing a line of high-value protective

apparel, infection control products and a line of construction weatherization building products

for the housing market. Our products are sold both under the "Alpha Pro Tech" brand name as

well as under private labels.

History

Established in 1989, the company proceeded through various acquisitions which added

protective apparel, automated shoe covers and lamination capabilities. The companys name was

changed to Alpha Pro Tech in 1994. Currently, the company maintains four vertically integrated

production centers producing innovative and high quality products.

Products

Our products are classified into three business segments. Protective Apparel featuring a complete

head to toe protective apparel line, consisting of shoe covers, coveralls, bouffant caps, gowns,

frocks and lab coats; Infection Control consisting of a full line of face masks and eye shields, and

Building Products consisting of house wrap and synthetic roof underlayment.

Markets

Target markets are those in the manufacturing of pharmaceuticals, bio-pharmaceutical

manufacturing and medical device manufacturing, lab animal research, high technology

electronics manufacturing which includes the semi-conductor market, medical, dental and

construction supply and roofing distributors.





ability of a company to pay its short-term creditors from the realization of its current assets and


Year 2012 2011 2010

Current Ratio 31.53 35.17 39.23

Alpha Pro Tech, Ltd. current ratio in 2011 is 35.17,and 2010 is 39.23 this means current asset of

the company is 35.17times more than its current liabilities, and this amount of current asset is

good for the company, its shows that company has enough asset for meet the short term

liabilities and its also use its asset perfectly.

Quick Ratio:

Year 2012 2011 2010

Quick Ratio 17.52 17.27 17.024

0

5

10

15

20

25

30

35

40

45

2009.5 2010 2010.5 2011 2011.5 2012 2012.5


Quick Ratio of Alpha Pro Tech, Ltd. shows that in 2012 the company has 17.52 times ability to

meet its current liabilities. In 2011 company has 17.27 times current liabilities, its improve than

2011. In 2011 the company need to increase it and the company and now the company is good

position.




better

Year 2012 2011 2010

Working capital to sales 0.830 0.772 0.712

16.9

17

17.1

17.2

17.3

17.4

17.5

17.6

2009.5 2010 2010.5 2011 2011.5 2012 2012.5


Alpha Pro Tech, Ltd. working capital net sales in 2012 was 0.830 this means company needs

money 0.830 times than it sales, in 2011 it was 0.772. This both are good.




Year 2012 2011 2010

Debt to Asset 0.65 0.491 0.37

0.7

0.72

0.74

0.76

0.78

0.8

0.82

0.84

2009.5 2010 2010.5 2011 2011.5 2012 2012.5

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

2009.5 2010 2010.5 2011 2011.5 2012 2012.5


This companys debt to asset ratio is .65 this means the company 65% is debt financing in 2010





Year 2012 2011 2010

Debt to Equity 2.33 1.468 0.923

Companys debt to equity ratio in 2011 was 1.468this means the companys equity is 1.468times


Inventory turnover




inventory.

0

0.5

1

1.5

2

2.5

2009.5 2010 2010.5 2011 2011.5 2012 2012.5


Year 2012 2011 2010







Year 2012 2011 2010

Daily Inventory held 218.5 232.9 248.2

1.45

1.5

1.55

1.6

1.65

1.7

2009.5 2010 2010.5 2011 2011.5 2012 2012.5


Alpha Pro Tech, Ltd. has daily inventory held in 2011 was 232.9means, its inventory takes

average 232.9days to turn into cash and in 2010 it takes 248.2 days. So it increase in 2011 is a

good signal for the company.






Year 2012 2011 2010


215

220

225

230

235

240

245

250

2009.5 2010 2010.5 2011 2011.5 2012 2012.5


Alpha Pro Tech, Ltd. day sales outstanding in 2011 are 44.74it shows its takes average

44.74days to collect its receivables. In 2010 it was 46.28days so the amount of days decrease and

its a good sign for the company.




credit.

Year 2012 2011 2010


43

43.5

44

44.5

45

45.5

46

46.5

2009.5 2010 2010.5 2011 2011.5 2012 2012.5


Alpha Pro Tech, Ltd. Days payable outstanding in 2011 is 10.44means it takes 10.44 days to pay

its payable. In 2010 it takes 7.021 days, company takes less time to pay its payables and less time

to collect its receivables and its a good sign for the company.

Operating cycle:


Year 2012 2011 2010

Operating Cycle 258 277 297

0

2

4

6

8

10

12

14

16

18

2009.5 2010 2010.5 2011 2011.5 2012 2012.5

255

260

265

270

275

280

285

290

295

300

2009.5 2010 2010.5 2011 2011.5 2012 2012.5


Alpha Pro Tech, Ltd. Operating Cycle in 2011 is 277means it takes average 277 days to

purchase inventory and take cash from sales the inventory. In 2010 it takes average 297days and

now it takes 61 days so its good for the company.

FIN 340 Group Project | Property & Casualty Insurance Industry 69

Property & Casualty Insurance Industry

Everest Re Group

Everest Re Group, Ltd., through its subsidiaries, is principally engaged in the underwriting of reinsurance

and insurance in the United States, Bermuda and international markets. The Company underwrites

reinsurance both through brokers and directly with ceding companies. It operates in four segments: U.S.

Reinsurance, Insurance, International and Bermuda. On January 2, 2011, the Company acquired the

business and operations of Heartland Crop Insurance, Inc. of Topeka, Kansas. On January 28, 2011, the

Company acquired the entire business and operations of Premiere Insurance Underwriting Services

(Premiere) of Toronto, Canada. On January 31, 2011, the Company acquired operations of the financial

lines business of Executive Risk Insurance Services, Ltd. (Executive Risk) of Toronto, Canada.


Ratios

1. Current Ratio = Current Assets/Current Liabilities

2012 2011 2010

2,918,902,000/56,354,000 2,830,459,000/1,02,312,00

0

2,788,883,000/62,899,000

= 51.80 = 27.67 = 44.34


0.36

Market Leader

12.92

Industry Average

18.48

Current Ratio Companies used to maintain higher current ratio which would indicate their

increased ability to cover payables. This is usually good when the industry is risky and the

positive current ratio will enable the firms to recover from any type of disasters in the unseen

future. However, a new trend is recently booming where the current ratio is going down and

firms want to their current ratio to be 0 which is considered as the optimum value. But in this

case we can see that the current ratio for Everest Re Group has not been consistent and is too

high related to the standard. So the company is not well managed as the company is overloaded

with assets which are not used properly.

0

10

20

30

40

50

60

2009.5 2010 2010.5 2011 2011.5 2012 2012.5


Quick Ratio = (Current Assets-Inventory)/Current Liabilities

2012 2011 2010

(2,918,902,000- 0)

/56,354,000

(2,830,459,000-

0)/1,02,312,000

(2,788,883,000-

0)/62,899,000

= 51.80 = 27.67 = 44.34


0.36

Market Leader

12.92

Industry Average

18.48

Quick Ratio This is a measure of the firms ability to pay current liabilities with its most liquid

assets. Again we can see that theoretically the high quick ratio indicates towards its capacity to

pay current liabilities. But the high amount proves the inefficiency of the company. The ratio has

been fluctuating over the years.

Net Working Capital = Current Assets-Current Liabilities

2012 2011 2010

2,918,902,000-56,354,000 2,830,459,000-

1,02,312,000

2,788,883,000-62,899,000

= 2,862,548,000 =2,728,147,000 = 2,725,984,000


-3,721,738

Market Leader

5,660,000

Industry Average

1,874,427.5

0

10

20

30

40

50

60

2009.5 2010 2010.5 2011 2011.5 2012 2012.5


Net Working Capital A positive level of net working capital indicates that current liabilities are

not been used for financing the net fixed asset which is relatively risky. The net working capital

of the company Everest Re Group Ltd. has been seen at an inclining trend over the years. This is

good news for the company.

Total Liabilities to Total Assets = Total Liabilities/Total Assets

2012 2011 2010

18,893,555,000/12,822,180,0

00

18,384,198,000/12,100,681,0

00

18,001,312,000/11,899,590,0

00

= 1.47 = 1.51 = 1.51


0.66

Market Leader

0.87

Industry Average

0.72

Total Liabilities To Total Assets A higher value is risky because it shows proportionately

greater use of borrowed money that must be paid back with interest. Everest Re Group Ltd. has

reduced their Total Liabilities to Total Assets from 1.51 to 1.47 in the period 2009 -2011.

Long-Term Debt to Capital = Long-Term Debt/(Long Term Debt + Equity)

2012 2011 2010

542,304,000/(542,304,000 +

6,071,375,000)

684,895,000/(684,895,000 +

6,283,517,000)

832,994,000/(832,994,000 +

6,101,722,000)

= 0.082 = 0.098 = 0.12

2,700,000,000

2,720,000,000

2,740,000,000

2,760,000,000

2,780,000,000

2,800,000,000

2,820,000,000

2,840,000,000

2,860,000,000

2,880,000,000

2009.5 2010 2010.5 2011 2011.5 2012 2012.5



0.59

Market Leader

0.24

Industry Average

0.27

Long-Term Debt To Capital -The lower the value, the better it is for the company. It is because

the ratio measures the percent of long-term financing that is borrowed. More debt reduces the

financial flexibility and increases risks to creditors. Everest Re Group Ltd. has been successful in

lowering the value each of the last three years.

Net Profit Margin = Net Income/Revenue

2012 2011 2010

(80,486,000)/4,693,961,000 610,754,000/4,705,807,000 806,989,000/4,498,578,000

= - 0.017 = 0.13 = 0.18


0.108

Market Leader

0.07

Industry Average

0.027

0

0.02

0.04

0.06

0.08

0.1

0.12

0.14

2009.5 2010 2010.5 2011 2011.5 2012 2012.5


Return on Total Assets = Net Income/Total Assets

2012 2011 2010

(80,486,000)/

12,822,180,000

610,754,000/12,100,681,000 806,989,000/11,899,590,000

= - 0.0062 = 0.05 = 0.067


0.027

Market Leader

0.01

Industry Average

0.00425

Cash Flow to Debt = (Net Income + Depreciation)/(Short Term Debt + Long Term Debt)

-0.05

0

0.05

0.1

0.15

0.2

2009.5 2010 2010.5 2011 2011.5 2012 2012.5

-0.01

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

0.08

2009.5 2010 2010.5 2011 2011.5 2012 2012.5


2012 2011 2010

( -80,486,000 +47,921,000)/

542,304,000

(610,754,000+46,171,000)/

734,895,000

(806,989,000+32,364,000)/

832,994,000

= - 0.06 = 0.89 = 1.007


0.57

Market Leader

0.38

Industry Average

0.1925

Cash Flow to Debt Ratio - Provides an indication of a company's ability to cover total debt with

its yearly cash flow from operations. The higher the ratio, the better is the company's ability to

carry its total debt. Everest Re Group Ltd. had a ratio of 1.007 in 2009 and - 0.06 in 2011. This

means that the company was not performing good considering clearing its debts.

Days Sales Outstanding (DSO) = Accounts Receivable/( Sales/365)

2012 2011 2010

1,784,919,000/(4,693,961,00

0/ 365)

1,786,772,000/(4,705,807,00

0/ 365)

1,868,154,000/(4,498,578,00

0/ 365)

= 138.80 = 138.60 = 151.58


268.26

Market Leader

369.69

Industry Average

260.0225

-0.2

0

0.2

0.4

0.6

Documents

Ratio Analysis of three different industries