Finance Essays Samples
[...] Analyze the financial position of three companies that operate in the food retail industry.
While for thorough financial analysis, especially in a food retail industry, more than one year of financial records is needed, the research below will attempt to indicate which of the three given companies is more profitable, has better working capital situation, and should be considered as a better target for investors.
The first company to be analyzed is Company X. Judging from the Gross profit margin and Net profit margin the company is in a healthy financial condition. The company's manufacturing and distribution efficiency during the production process can be considered high, with the spread between gross and net profit margin average for the given industry. The figures for return on capital employed and return on shareholders' funds, as well as earnings per share that are lower than in other two companies, indicate that the company's shareholders play a more important role than in other companies under review. Higher return on shareholders' funds than in other companies may mean that it is important for the company to raise further funds for expansion via rights issues (issuing shares). As rights issues increase, the earnings per share drop, which is seen from Company X's financial indicators. Since rights issues should be considered by a company only when it shows an above average return with future prospects good in terms of profit, and the data presented suggests that performance of other companies is somewhat better, Company X must be careful with this instrument so that not to lose the attractiveness of its stock. While the company has a high dividend yield of 7% and this compensates for lower earnings per share, this factor may not be enough to attract investors in the future, and may be perceived by investors as a step to improve the attractiveness of Company X's shares prior to rights issue. [...]
[...] During the 1990s, WorldCom was the ultimate high-stepper, doing mega-deal after mega-deal in an industry that had never been hotter. WorldCom's business model could scarcely have been more fashionable. The company was almost single-handedly responsible for shaking up the sleepy US telecom market. As the monopoly of incumbent AT&T was dismantled, WorldCom founder and CEO Bernie Ebbers bought up spare telephone time and repackaged it at bargain prices. [...]
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