1. Digby Performance Compared to Rivals Essay.
Digby Performance Compared to Rivals Essay. Digby Performance Compared to RivalsDigby
is competing in an industry that have five other highly competitive firms. The main
objective for the firm is to outdo the rest and post significant returns on an annual basis
(Chapman, Murray, & Mellor, 2017). However, this is not something easy for firms that are
selling different items, and employing different strategies in the same market. This analysis
examines the performance of Digby on different aspects, and compares that to the
performance of Ferris, rival in the sector.Performance ComparisonORDER A PLAGIARISM-
FREE PAPER HEREThere are important ratios to different things like sales, equity and
assets. The main focus of every business is to generate the highest profits from each
category of business. The graphs below illustrates Digby efficiency and returns based on
three aspects, sales, assets and equity. Digby Performance Compared to Rivals Essay.D5.
Discussion Of Ethical Vignettes: Approaching Competence Approaching Competence: The
discussion is not logical or does not include sufficient detail of how each of the 3 ethical
vignettes presented impacted the company’s financial performance. Digby Performance
Compared to Rivals Essay. EVALUATOR COMMENTS: ATTEMPT 3A general summary is
included regarding the ethics modules. It is not clear how the ethical scenarios presented
impacted the company’s performance in terms of the percentage of increased expenses or a
comparison of costs from previous years to the current costs.Digby Performance Compared
to RivalsDigby is competing in an industry that have five other highly competitive firms. The
main objective for the firm is to outdo the rest and post significant returns on an annual
basis (Chapman, Murray, & Mellor, 2017). However, this is not something easy for firms that
are selling different items, and employing different strategies in the same market. This
analysis examines the performance of Digby on different aspects, and compares that to the
performance of Ferris, rival in the sector.Performance Comparison. Digby Performance
Compared to Rivals Essay.There are important ratios to different things like sales, equity
and assets. The main focus of every business is to generate the highest profits from each
category of business. The graphs below illustrates Digby efficiency and returns based on
three aspects, sales, assets and equity.Analysis GraphsReturn on Sales (ROS)Graph 1ROS is a
measure of how efficiently a firm turns sales into profits (Jinadu, Oluwafemi, Soyinka, &
Akanfe, 2017). Highly efficient firms have a high level of ROS. That means the company is
able to convert a higher ratio of sales into profits. Graph 1 shows that Digby outperformed
all other firms in the industry, managing 8.7 percent ROS compared to the closes rival
Andrews, which had 7.0 percent. The rest of the firms had less ROS, an indication that they
2. were not as efficient as Digby. However, the major rival was outperformed and managed to
post 5 percent return on sales. The following graph shows the differences in each
round.Digby was better in the next round, with 8.9 percent returns compared to 5.3 percent
posted by its closest rival, Ferris. Both continued to improve as Digby managed a 9.2
percent returns compared to Ferris which had 6.1 percent. Efficacy in this category implies
that the firm maximized sales over a small percentage of expenses. Firms that had less ROS
had more expenses per unit of sales, and that made them less efficient.Return on Equity
(ROE)Graph 2Investors put their money into companies with expectations of earning some
profits. These money they invest is called equity, and is entitled to some equity. Investors
would want to earn as much as possible for every unit of equity and that means firms that
post higher ROE are better placed to attract investors than those who post less ROE (Jinadu,
Oluwafemi, Soyinka, & Akanfe, 2017).. Therefore, ROE is just the profits investors get from
their investments in the company. Digby was exceptional in creating value for investors,
posting 19.3 percent ROE. In other words, that would mean investors at Digby made 0.193
cents from every dollar of investment. The second best company was Chester, which posted
13.7 percent ROE, followed by Baldwin, Ferries, Erie, and the worst performer was Ferries
at Andrews at 11.7 percent. Once more, Digby outperformed rivals. Digby Performance
Compared to Rivals Essay.The Next two rounds Digby performed better compared to Ferris.
Digby had a 19.8 and 21.23 percent in round 7 and round 8 respectively, with Ferris
managing 11.8 and 13.5 percent respectively. The firm was superior in terms of giving
investors returns, compared to the key rivals in this case.Return on Assets (ROA)Graph
3Return on Assets (ROA) is the firm’s profits compared to its overall resources (Jinadu,
Oluwafemi, Soyinka, & Akanfe, 2017). Firms aim to gain optimally from there resources.
Digby once more was exceptional in this category, turning a 10.4 percent ROA. Chester, the
second best was three percentage points below, return on 7.0 percent ROA. Erie, Ferris and
Andrews each had 6.0 percent ROA, and Baldwin performed slightly better. In terms of
using sales, assets and equity to generate value, Digby outperformed its rivals for the three
years, on a continual basis.Explanation of LeverageOne key determinant of ROE and ROA is
the capital structure. Capital structure, which defines leverage, looks at the ratio between
assets and liabilities, or debts (Jain, Bhargava, & Bhargava, 2017). It is possible to have firms
that are funded 100 percent by equity, and this firms will have all profits going to investors.
However, due to cost implications, firms decide to raise part of capital through the debt
market. The most important leverage point measures debts t equity ratio. Digby
Performance Compared to Rivals Essay.The equity remains the same when assets are
increased through debts, but since the firm will have more assets (equity plus liabilities), it
is likely to increase profits. This means the ROE will possibly increase as well. The same
happens with assets, when firms increase assets through equity or liabilities, it can affect
the ROA in either way. In the long term the ROA may be low, but will increase over the long
term. Leveraging essential means using loans to increase overall value. Based on that, ROE
can be increased through leveraging, but ROA remains uncertain.Company
PerformanceStock Price Summary GraphGraph 4The share price is the key determinant of
the firm’s market capitalization. Investors expect stock price growth since that represent
part of their capital gains. Digby had the highest share price compared to rivals. It thus
3. follows that the company would have the highest market value. Digby market value stood at
$447 million compared to Digby that had a market value of $325 million. The stock price
experience stead increase for three years, hitting the climax in round eight. Despite the huge
market capitalization, the yield was dismal, Digby having a 2.5 percent compared to Ferris,
the industry leader in that category that had 10.5 percent. It ranked as the worst performer
in that category for three years. Digby Performance Compared to Rivals Essay.Digby had the
best earnings per share. The firm posted $30.87 with Chester coming close second, with
almost half the same amount. That illustrates how effective Digby was in return value to
shareholders. Ferris was the worst performer for the three year period, returning $7.56 for
every share. In terms of dividends, Digby gave out $6.00 in the last round, an improvement
from previous rounds. However, it was not the firm that gave out the most
dividends.Financial Standing AnalysisBalance SheetAn important aspect in the balance
sheet is checking whether available assets can cover liabilities. More importantly, it is
determining if the current assets can cover the current liabilities. This concept is called
current ratio, which measures the firm’s ability to use current assets to honour short term
financial obligations. The firm’s current ratio in round seven was 2.44, increasing to 2.56 in
the last round. That means the firm had more current assets than short term financial
obligations, placing it at a better position to settle them.In terms of assets, the company’s
total assets stood at $259.7 million, an increase from the previous round. Those assets
comprised both liabilities and equity. The company’s total equity share was $151.2 million,
and liabilities were $108.5 million, both had increased from previous year. This means the
firm has more equity than liabilities, and that gives it an advantage in sustainability and
keeping off external intervention. The owners were in control of the company, if the capital
structure is anything to consider. Digby Performance Compared to Rivals Essay.Income
StatementDigby posted sales worth $356 million followed by Chester that had $284 million,
the rest posted less. More sales means the company is doing better, and most firms does
everything to increase sales. However, as the firms increase sales, variable costs increase
while average fixed costs decline. This is measured by contribution margin. It is usually the
costs per increase in unit of sales. That means firms with higher contribution margins are
more efficient. Digby had a 44.3 percent contribution margin, but Ferris and Baldwin had
less than 40 percent, with Andrews having over 50 percent, the most efficient. Digby was
the best performer with $56 million in net income, followed by Chester with $38 million.
Digby Performance Compared to Rivals Essay.Cash Position AnalysisFirms receive cash flow
from three main sources, investing activities, financing activities and operating activities.
Operating activities is the common and the highest contributor to cash flow. The firm’s net
cash flow from operations was $50 million, and increase from a year earlier when it had
posted 46 million from operations. This means the management did well in sales, working
on various departments including production and marketing to increase sales.The firm had
negative cash flow from investing activities. That means it spent more resources than it
received from investments. This can include purchase of equipment, construction and other
activities that consume resources. However, the value was -$12 million compared the
previous years when the value was -$70 million. The firm also retired resources and
achieved a negative value from financing in last round, compared to a year earlier when it
4. had managed to accrue $13 million from financing activities. At the closure, the firm’s net
cash flow was $50 million, an increase from a year earlier when it had $42 in net cash
flow.Discussion of Ethical VignettesThere are several ethical considerations as the firm
pushes to increase profitability, which is the main goal of the company. One is increase
technology that risks employee jobs to increase productivity. Investments in plants and
other technologies will mean the company will need fewer employees. Usually, employees
would lose their jobs. However, this action has a positive effect on the firm’s profitability. It
is an ethical issues, and the company can consider expanding to retain them. There are
other concerns like employee training which the firm must pay, investing in green
technologies and others.Greening the MessageThe company will work on greening message
particularly to introduce energy efficiency and many other green technologies. This will
likely increase demand as the products will meet the customer expectations. It will also
exhibit the company as sensitive to environmental conservation. This is something which is
essential and has multiple benefits for the whole organization. This action will significantly
lower administration costs, increase awareness level and increase demand. All these will
have an effect on the firm’s bottom line.To Speak or Not to SpeakThere is a long time value
for being ethical particularly when dealing with things that matter most. If the company is
failing to do the right thing, speaking up can save it over the long term. Damaging water
community may benefit the company in the short term, but over the long term it cannot. It is
thus essential to make the call to the environmental authorities. While the damage can
happen at the start due to poor publicity, over the long term the changes that will happen,
including purchase of new equipment to address the concern will benefit the company.
Digby Performance Compared to Rivals Essay.Face up to ItChallenges occur in almost all
organizations and facing them is one of the things which anyone should look up to. In this
case there is some errant sales reps who should be terminated, and a contract renegotiated.
The contract will be almost the same, but there shall be display of quality leadership. With
the staff more excited over the whole issue, they will handle customers in a better way. This
will likely drive demand high.ConclusionDigby outperformed rivals in almost every
financial metric and more particularly its major rival Ferris. The company managed
significant sales, and improved efficiency which was the core reason why it managed
significant returns from sales and assets. However, the industry remains highly competitive
for three rounds, and that would be detected from stagnating sales over the same
period.Digby Performance Compared to RivalsDigby is competing in an industry that have
five other highly competitive firms. The main objective for the firm is to outdo the rest and
post significant returns on an annual basis (Chapman, Murray, & Mellor, 2017). However,
this is not something easy for firms that are selling different items, and employing different
strategies in the same market. This analysis examines the performance of Digby on different
aspects, and compares that to the performance of Ferris, rival in the sector.Performance
ComparisonThere are important ratios to different things like sales, equity and assets. The
main focus of every business is to generate the highest profits from each category of
business. The graphs below illustrates Digby efficiency and returns based on three aspects,
sales, assets and equity.Analysis GraphsReturn on Sales (ROS)Graph 1ROS is a measure of
how efficiently a firm turns sales into profits (Jinadu, Oluwafemi, Soyinka, & Akanfe, 2017).
5. Highly efficient firms have a high level of ROS. That means the company is able to convert a
higher ratio of sales into profits. Graph 1 shows that Digby outperformed all other firms in
the industry, managing 8.7 percent ROS compared to the closes rival Andrews, which had
7.0 percent. The rest of the firms had less ROS, an indication that they were not as efficient
as Digby. However, the major rival was outperformed and managed to post 5 percent return
on sales. The following graph shows the differences in each round. Digby Performance
Compared to Rivals Essay. Digby was better in the next round, with 8.9 percent returns
compared to 5.3 percent posted by its closest rival, Ferris. Both continued to improve as
Digby managed a 9.2 percent returns compared to Ferris which had 6.1 percent. Efficacy in
this category implies that the firm maximized sales over a small percentage of expenses.
Firms that had less ROS had more expenses per unit of sales, and that made them less
efficient. Digby Performance Compared to Rivals Essay. Return on Equity (ROE)Graph
2Investors put their money into companies with expectations of earning some profits.
These money they invest is called equity, and is entitled to some equity. Investors would
want to earn as much as possible for every unit of equity and that means firms that post
higher ROE are better placed to attract investors than those who post less ROE (Jinadu,
Oluwafemi, Soyinka, & Akanfe, 2017).. Therefore, ROE is just the profits investors get from
their investments in the company. Digby was exceptional in creating value for investors,
posting 19.3 percent ROE. In other words, that would mean investors at Digby made 0.193
cents from every dollar of investment. The second best company was Chester, which posted
13.7 percent ROE, followed by Baldwin, Ferries, Erie, and the worst performer was Ferries
at Andrews at 11.7 percent. Once more, Digby outperformed rivals. Digby Performance
Compared to Rivals Essay.The Next two rounds Digby performed better compared to Ferris.
Digby had a 19.8 and 21.23 percent in round 7 and round 8 respectively, with Ferris
managing 11.8 and 13.5 percent respectively. The firm was superior in terms of giving
investors returns, compared to the key rivals in this case.Return on Assets (ROA)Graph
3Return on Assets (ROA) is the firm’s profits compared to its overall resources (Jinadu,
Oluwafemi, Soyinka, & Akanfe, 2017). Firms aim to gain optimally from there resources.
Digby once more was exceptional in this category, turning a 10.4 percent ROA. Chester, the
second best was three percentage points below, return on 7.0 percent ROA. Erie, Ferris and
Andrews each had 6.0 percent ROA, and Baldwin performed slightly better. In terms of
using sales, assets and equity to generate value, Digby outperformed its rivals for the three
years, on a continual basis.Explanation of LeverageOne key determinant of ROE and ROA is
the capital structure. Capital structure, which defines leverage, looks at the ratio between
assets and liabilities, or debts (Jain, Bhargava, & Bhargava, 2017). It is possible to have firms
that are funded 100 percent by equity, and this firms will have all profits going to investors.
However, due to cost implications, firms decide to raise part of capital through the debt
market. The most important leverage point measures debts t equity ratio.The equity
remains the same when assets are increased through debts, but since the firm will have
more assets (equity plus liabilities), it is likely to increase profits. This means the ROE will
possibly increase as well. The same happens with assets, when firms increase assets
through equity or liabilities, it can affect the ROA in either way. In the long term the ROA
may be low, but will increase over the long term. Leveraging essential means using loans to
6. increase overall value. Based on that, ROE can be increased through leveraging, but ROA
remains uncertain. Digby Performance Compared to Rivals Essay.Company
PerformanceStock Price Summary GraphGraph 4 The share price is the key determinant of
the firm’s market capitalization. Investors expect stock price growth since that represent
part of their capital gains. Digby had the highest share price compared to rivals. It thus
follows that the company would have the highest market value. Digby market value stood at
$447 million compared to Digby that had a market value of $325 million. The stock price
experience stead increase for three years, hitting the climax in round eight. Despite the huge
market capitalization, the yield was dismal, Digby having a 2.5 percent compared to Ferris,
the industry leader in that category that had 10.5 percent. It ranked as the worst performer
in that category for three years.Digby had the best earnings per share. The firm posted
$30.87 with Chester coming close second, with almost half the same amount. That
illustrates how effective Digby was in return value to shareholders. Ferris was the worst
performer for the three year period, returning $7.56 for every share. In terms of dividends,
Digby gave out $6.00 in the last round, an improvement from previous rounds. However, it
was not the firm that gave out the most dividends. Digby Performance Compared to Rivals
Essay.Financial Standing AnalysisBalance SheetAn important aspect in the balance sheet is
checking whether available assets can cover liabilities. More importantly, it is determining if
the current assets can cover the current liabilities. This concept is called current ratio,
which measures the firm’s ability to use current assets to honour short term financial
obligations. The firm’s current ratio in round seven was 2.44, increasing to 2.56 in the last
round. That means the firm had more current assets than short term financial obligations,
placing it at a better position to settle them. Digby Performance Compared to Rivals Essay.In
terms of assets, the company’s total assets stood at $259.7 million, an increase from the
previous round. Those assets comprised both liabilities and equity. The company’s total
equity share was $151.2 million, and liabilities were $108.5 million, both had increased
from previous year. This means the firm has more equity than liabilities, and that gives it an
advantage in sustainability and keeping off external intervention. The owners were in
control of the company, if the capital structure is anything to consider. Digby Performance
Compared to Rivals Essay.Income StatementDigby posted sales worth $356 million followed
by Chester that had $284 million, the rest posted less. More sales means the company is
doing better, and most firms does everything to increase sales. However, as the firms
increase sales, variable costs increase while average fixed costs decline. This is measured by
contribution margin. It is usually the costs per increase in unit of sales. That means firms
with higher contribution margins are more efficient. Digby had a 44.3 percent contribution
margin, but Ferris and Baldwin had less than 40 percent, with Andrews having over 50
percent, the most efficient. Digby was the best performer with $56 million in net income,
followed by Chester with $38 million.Cash Position AnalysisFirms receive cash flow from
three main sources, investing activities, financing activities and operating activities.
Operating activities is the common and the highest contributor to cash flow. The firm’s net
cash flow from operations was $50 million, and increase from a year earlier when it had
posted 46 million from operations. This means the management did well in sales, working
on various departments including production and marketing to increase sales.The firm had
7. negative cash flow from investing activities. That means it spent more resources than it
received from investments. This can include purchase of equipment, construction and other
activities that consume resources. However, the value was -$12 million compared the
previous years when the value was -$70 million. The firm also retired resources and
achieved a negative value from financing in last round, compared to a year earlier when it
had managed to accrue $13 million from financing activities. At the closure, the firm’s net
cash flow was $50 million, an increase from a year earlier when it had $42 in net cash flow.
Digby Performance Compared to Rivals Essay.Discussion of Ethical VignettesThere are
several ethical considerations as the firm pushes to increase profitability, which is the main
goal of the company. One is increase technology that risks employee jobs to increase
productivity. Investments in plants and other technologies will mean the company will need
fewer employees. Usually, employees would lose their jobs. However, this action has a
positive effect on the firm’s profitability. It is an ethical issues, and the company can
consider expanding to retain them. There are other concerns like employee training which
the firm must pay, investing in green technologies and others. Digby Performance
Compared to Rivals Essay.The company will work on greening message particularly to
introduce energy efficiency and many other green technologies. This will likely increase
demand as the products will meet the customer expectations. It will also exhibit the
company as sensitive to environmental conservation. There is a long time value for being
ethical. If the company is failing to do the right thing, speaking up can save it over the long
term. Damaging water community may benefit the company in the short term, but over the
long term it cannot. It is thus essential to make the call to the environmental authorities.
While the damage can happen at the start due to poor publicity, over the long term the
changes that will happen, including purchase of new equipment to address the concern will
benefit the company.Challenges occur in almost all organizations and facing them is one of
the things which anyone should look up to. In this case there is some errant sales reps who
should be terminated, and a contract renegotiated. The contract will be almost the same, but
there shall be display of quality leadership. With the staff more excited over the whole issue,
they will handle customers in a better way. This will likely drive demand
high.ConclusionDigby outperformed rivals in almost every financial metric and more
particularly its major rival Ferris. The company managed significant sales, and improved
efficiency which was the core reason why it managed significant returns from sales and
assets. However, the industry remains highly competitive for three rounds, and that would
be detected from stagnating sales over the same period. Digby Performance Compared to
Rivals Essay.
