RaySearch Laboratories is a medical technology company focused on developing advanced software for radiation therapy cancer treatment. A financial analysis of RaySearch found the company to be highly profitable, with an EBIT margin of 27.8% in 2014 close to its target of exceeding 30%. RaySearch's net profit margin of 27.6% significantly exceeds industry averages in both Europe and the US, demonstrating its strong relative profitability. While overcoming a 2013 lawsuit, RaySearch has seen nearly doubled share prices over the past year as sales of its flagship RayStation product continue to increase. The company's strong financial position and profitable growth establish it as a promising investment opportunity.
FINANCIAL PERFORMANCE ANALYSIS OF BHARTI AIRTEL LIMITEDyashmin khatun
This document discusses financial statement analysis and ratio analysis. It provides background on analyzing a company's financial stability, profitability, and performance over time using various ratios and comparisons. The objectives are to analyze the financial position, liquidity, and profitability of Bharti Airtel over a five year period and identify its financial strengths and weaknesses. Limitations include a lack of structured data from the company and a limited three year study period relying on secondary data. A literature review found previous research analyzing the relationship between working capital management, cash conversion cycles, and company profitability.
The document analyzes the working capital of Wipro Limited over three fiscal years. It defines working capital and its components. It finds that Wipro's working capital and current ratio increased each year, indicating strong liquidity. While the working capital turnover ratio decreased slightly each year, it remained positive, showing efficient use of capital. In conclusion, Wipro managed its working capital well over this period to support profitability and meet obligations.
This document is a study submitted by K T Phanindra to the Institute of Public Enterprise in partial fulfillment of the requirements for a Post Graduate Diploma in Management. The study examines the impact of liquidity ratios on a company's profitability and performance. It includes an introduction to ratio analysis and its uses and limitations. The study will analyze different types of ratios including debt, liquidity, profitability, cash flow, and market value ratios. It will focus specifically on different debt ratios and how they impact a company's financial performance and profitability. The objectives are to understand the effect of debt ratios on performance and how managers use debt analysis in decision making. Secondary data from company financial statements will be used for the
1. The document discusses ratio analysis and financial analysis. Ratio analysis is a tool that evaluates the financial position and performance of a firm by establishing relationships between financial statement items.
2. Financial analysis identifies the financial strengths and weaknesses of a firm. It is done by analyzing ratios calculated from a firm's balance sheet and income statement. Key ratios include liquidity ratios, profitability ratios, and leverage ratios.
3. Ratio analysis involves comparing a firm's ratios to standards like its own past ratios, competitor ratios, industry averages, and projected ratios. This allows users to evaluate the firm's financial stability, profitability, and efficiency over time.
IRJET- Financial Strength Analysis of Unitech Company Using Altman’s Z score ...IRJET Journal
This document analyzes the financial strength of Unitech Company over a 10-year period using Altman's Z-score model. Altman's Z-score model uses multiple financial ratios to predict the likelihood of bankruptcy. The document provides background on Altman's Z-score model and the specific formulas used for different types of companies. It then analyzes Unitech's financial statements over 10 years to calculate financial ratios and the Z-score. The results will help assess Unitech's financial situation and bankruptcy risk during that period.
Jazzit Score is a financial reporting tool that automatically creates a comprehensive 32 page financial report analyzing the health of your clients' business. Drawing on the trial balance info already entered in CaseWare Working Papers, it includes ratio analysis, trend analysis, comparative industry and custom defined benchmarks with insightful commentary.
Founded in 2000, Jazzit is Canada's leading supplier of premium CaseWare templates for accountants. Our products include Jazzit Fundamentals, Jazzit Checklists and Jazzit Score, creating a powerful suite of automated solutions for SME practioners. Jazzit Fundamentals, the flagship product, is an integrated suite of over 100 templates and letters that assist public accountants in completing year-end engagements with their corporate clients. With offices in Calgary, Alberta, and Kelowna, B.C., Jazzit's software serves over 5,000 accounting professionals across Canada.
This document appears to be a project report submitted for a Master's degree in Business Administration. It includes an introduction to ratio analysis, definitions of key terms, and outlines various types of ratios that will be analyzed in the report such as liquidity, activity, profitability, and leverage ratios. The objectives of the study are to analyze the financial position and performance of the company through ratio analysis and suggest measures to improve performance.
This document summarizes a summer internship report for MCC PTA India Corp. Private Limited conducted by Pooja Ghosh. It provides an overview of the company and methodology used in the report. The intern analyzed the company's working capital management, cash conversion cycle, inventory management, receivables management, and financial performance using various tools like ratio analysis, DuPont analysis, and Altman's Z-score. Key findings include the company's strong receivables and payables management which help maintain adequate liquidity.
FINANCIAL PERFORMANCE ANALYSIS OF BHARTI AIRTEL LIMITEDyashmin khatun
This document discusses financial statement analysis and ratio analysis. It provides background on analyzing a company's financial stability, profitability, and performance over time using various ratios and comparisons. The objectives are to analyze the financial position, liquidity, and profitability of Bharti Airtel over a five year period and identify its financial strengths and weaknesses. Limitations include a lack of structured data from the company and a limited three year study period relying on secondary data. A literature review found previous research analyzing the relationship between working capital management, cash conversion cycles, and company profitability.
The document analyzes the working capital of Wipro Limited over three fiscal years. It defines working capital and its components. It finds that Wipro's working capital and current ratio increased each year, indicating strong liquidity. While the working capital turnover ratio decreased slightly each year, it remained positive, showing efficient use of capital. In conclusion, Wipro managed its working capital well over this period to support profitability and meet obligations.
This document is a study submitted by K T Phanindra to the Institute of Public Enterprise in partial fulfillment of the requirements for a Post Graduate Diploma in Management. The study examines the impact of liquidity ratios on a company's profitability and performance. It includes an introduction to ratio analysis and its uses and limitations. The study will analyze different types of ratios including debt, liquidity, profitability, cash flow, and market value ratios. It will focus specifically on different debt ratios and how they impact a company's financial performance and profitability. The objectives are to understand the effect of debt ratios on performance and how managers use debt analysis in decision making. Secondary data from company financial statements will be used for the
1. The document discusses ratio analysis and financial analysis. Ratio analysis is a tool that evaluates the financial position and performance of a firm by establishing relationships between financial statement items.
2. Financial analysis identifies the financial strengths and weaknesses of a firm. It is done by analyzing ratios calculated from a firm's balance sheet and income statement. Key ratios include liquidity ratios, profitability ratios, and leverage ratios.
3. Ratio analysis involves comparing a firm's ratios to standards like its own past ratios, competitor ratios, industry averages, and projected ratios. This allows users to evaluate the firm's financial stability, profitability, and efficiency over time.
IRJET- Financial Strength Analysis of Unitech Company Using Altman’s Z score ...IRJET Journal
This document analyzes the financial strength of Unitech Company over a 10-year period using Altman's Z-score model. Altman's Z-score model uses multiple financial ratios to predict the likelihood of bankruptcy. The document provides background on Altman's Z-score model and the specific formulas used for different types of companies. It then analyzes Unitech's financial statements over 10 years to calculate financial ratios and the Z-score. The results will help assess Unitech's financial situation and bankruptcy risk during that period.
Jazzit Score is a financial reporting tool that automatically creates a comprehensive 32 page financial report analyzing the health of your clients' business. Drawing on the trial balance info already entered in CaseWare Working Papers, it includes ratio analysis, trend analysis, comparative industry and custom defined benchmarks with insightful commentary.
Founded in 2000, Jazzit is Canada's leading supplier of premium CaseWare templates for accountants. Our products include Jazzit Fundamentals, Jazzit Checklists and Jazzit Score, creating a powerful suite of automated solutions for SME practioners. Jazzit Fundamentals, the flagship product, is an integrated suite of over 100 templates and letters that assist public accountants in completing year-end engagements with their corporate clients. With offices in Calgary, Alberta, and Kelowna, B.C., Jazzit's software serves over 5,000 accounting professionals across Canada.
This document appears to be a project report submitted for a Master's degree in Business Administration. It includes an introduction to ratio analysis, definitions of key terms, and outlines various types of ratios that will be analyzed in the report such as liquidity, activity, profitability, and leverage ratios. The objectives of the study are to analyze the financial position and performance of the company through ratio analysis and suggest measures to improve performance.
This document summarizes a summer internship report for MCC PTA India Corp. Private Limited conducted by Pooja Ghosh. It provides an overview of the company and methodology used in the report. The intern analyzed the company's working capital management, cash conversion cycle, inventory management, receivables management, and financial performance using various tools like ratio analysis, DuPont analysis, and Altman's Z-score. Key findings include the company's strong receivables and payables management which help maintain adequate liquidity.
The document discusses various liquidity, activity, profitability, and leverage ratios calculated for a company from 2011-2014. The key ratios discussed are:
- Current ratio - Decreased each year from 1.36 in 2011 to 1.27 in 2014, with 2012 being the most acceptable at 1.39.
- Quick (acid-test) ratio - Ranged from 0.39 in 2011 to 0.49 in 2014, with 2012 being the most acceptable at 0.58.
- Inventory turnover - Ranged from 3.24 in 2011 to 5.07 in 2012, with 2012 having the highest turnover.
- Gross profit margin - Ranged from 8.26% in 2011 to
This document discusses liquidity ratios and how they can change based on a company's financial decisions. It defines two key liquidity ratios: the current ratio and acid test ratio. The current ratio measures current assets available to cover current liabilities, while the acid test only considers more liquid current assets. The document then demonstrates how taking on short-term debt or increasing capital can impact these ratios, making liquidity stronger by applying long-term resources to current assets but weaker by using short-term debt for fixed assets.
The document discusses ratio analysis, including identifying five common classes of ratios: liquidity, solvency, activity, profitability, and operating. It provides examples of common ratios within each class, such as current ratio and debt-to-equity ratio. The purposes of ratio analysis are also summarized, such as allowing managers to monitor performance and creditors to evaluate business solvency. Limitations of ratio analysis are noted.
1. The document is a student's project report on the financial ratio analysis of Wipro. It includes an acknowledgment section thanking various professors and institutions for their support and guidance.
2. There is a declaration by the student stating that the project is their original work and submitted for their Master's degree program.
3. The project contains a certificate from the student's teacher guide confirming they completed the research project on the given topic under their guidance.
Full Analyst Report: IntelGenx Tech. Rating: Buy. IntelGenx Looking Towards A...Viral Network Inc
- The report provides an investment analysis of IntelGenx Technologies Corp (IGXT), assigning a "Buy" rating and $3 price target.
- Key catalysts in 2013 include expected acceleration in sales of IGXT's migraine drug Forfivo and regulatory submissions of new drug candidates.
- IGXT is developing novel formulations of existing drugs and recently appointed a new CEO to help expand partnerships.
In this paper, we used financial statements as the main information to calculate the enterprise
value by discounted cash flow model. For the prediction of future cash flows in DCF model, a new method
based on the Markov chain is proposed to get the growth rates of future cash flows, instead of the fixed growth
rate method. The superior performance of it can be illustrated in empirical analysis. And the result shows that
we can improve the accuracy of the enterprise value evaluation with partial information by using the Markov
chain
Mercer Capital's Value Focus: Medical Technology | Mid-Year 2016Mercer Capital
Mercer Capital's Medical Technology Industry newsletter provides perspective on valuation issues. Each newsletter also includes macroeconomic trends, public market trends, and comparable public company metrics.
This document provides a comparative assessment of the stock valuation of Intel Corporation and Texas Instruments. It uses both absolute and relative valuation models, including discounted dividend, free cash flow, residual income, and market multiples models. The analysis finds that while Intel derives around 50% of its valuation from PCs, even a large decline in its PC market share would likely have only a minor impact on its overall valuation. It also determines that Texas Instruments' shares are a reasonable investment given its annual dividend, dividend growth history, and discounted cash flow valuation of around $55.9 billion compared to its recent market price of $52.6 billion.
This document is a project report submitted by Mr. Ojas Nitin Narsale, an M.Com student at the Parle Tilak Vidyalaya Association's M.L. Dahanukar College of Commerce in Mumbai, India. The report is on the topic of ratio analysis and was completed in the 2016-2017 academic year under the guidance of Prof. Karim. The report includes an introduction, objectives, methodology, literature review on ratio analysis, calculations of key financial ratios for a company, analysis of the results, and a summary.
Economic value added (eva) and shareholders wealthAlexander Decker
This document summarizes a research study that examines the relationship between Economic Value Added (EVA) and shareholder wealth creation for selected automobile companies in India. The study uses factor analysis to identify factors that contribute most to shareholder wealth maximization. The results show that three factors were extracted from eight variables analyzed, explaining 69.902% of the total variance. Specifically, sales and profit after tax were found to have a stronger relationship with EVA than other variables. The document provides background on EVA and outlines the methodology used, including measurement of EVA, sample selection, and statistical analysis conducted.
11.economic value added (eva) and shareholders wealthAlexander Decker
This document summarizes a research study that examines the relationship between Economic Value Added (EVA) and shareholder wealth creation for selected automobile companies in India. The study uses factor analysis to identify factors that contribute most to shareholder wealth maximization. The results show that three factors were extracted from eight variables, explaining 69.902% of the total variance. Specifically, sales and profit after tax were found to have a stronger relationship with EVA than other variables. The document provides background on EVA and outlines the methodology used, including measurement of EVA, sample selection, and statistical analysis.
Century Auto Tech Pvt. Ltd. is an automotive components manufacturer founded in 1999 that now has annual turnover of Rs. 9.3 million. The document analyzes the company's financial statements from 2011-12 to 2012-13. Liquidity and solvency ratios are calculated, showing the company's current ratio, liquid ratio, debt-equity ratio, and proprietary ratio are below standards, indicating low short-term liquidity, high financial risk, and weak long-term financial position. The analysis suggests the company lacks working capital and its debt levels pose a danger to long-term lenders.
This document provides an overview and summary of The Progressive Corporation's 2006 Report on Loss Reserving Practices. The report examines Progressive's loss reserving process and how it affects their financial results. It includes sections on their financial objectives, how reserve development affects financial reporting, the different types of reserves, how reserves are estimated by segment, and recent process enhancements. The goal is to help stakeholders understand Progressive's loss reserving methodology and ensure reserves are adequate while developing with minimal variation over time.
Ratio Analysis of Samsung Electronics Co. Ltd.Nikita Jangid
This document provides an overview of ratio analysis and its significance. It begins by defining ratio analysis as the process of determining and interpreting numerical relationships based on financial statements. Ratios are calculated by dividing two relevant figures and can be used to assess various aspects of organizational performance such as profitability, liquidity, efficiency, and financial stability. The document then discusses the objectives and types of ratios, how ratios should be calculated and interpreted, and compares ratios to historical standards, industry benchmarks, and budgets. It emphasizes that ratios must be carefully analyzed in context. Finally, the document outlines the significance of ratio analysis for various stakeholders like management, owners, creditors, employees and governments in evaluating financial health and making informed decisions.
Effect of Financial Ratios on Firm Performance Study of Selected Brewery Firm...ijtsrd
The study assessed the effect of financial ratios on performance of Quoted Breweries firms in Nigeria. It made use of ex post facto research design. Data were gotten from secondary sources obtained from NSE fact books and annual reports accounts of the selected Breweries Companies. The population of the study consisted of thirteen 13 quoted Breweries firms listed on the Nigerian Stock Exchange as at 31st December, 2018. Four 4 of the quoted Breweries firms are selected to form the sample of the study for the period of nine 9 years 2010 – 2018 . The relevant data obtained were subjected to statistical analysis using Pearson correlation coefficient and regression analysis. The results of this study revealed that there is a significant relationship between current ratio and firm performance but negative effect. Debt equity ratio has a significant effect on return on asset of Nigerian Breweries. The result of the study concludes that Nigerian breweries companies are relatively using an optimal mix of debt to equity which is evident from the significant positive relationship of debt equity ratio with financial performance of the Nigerian Breweries. The researchers recommended that the management should employ all carefulness while financing with long term debt instruments endeavor to find out the best and optimal combination of long term debt and equity that will impact positively on the value of the firm. Agbata, Amaka Elizabeth | Osingor, Arinze Stanley | Ezeala, George "Effect of Financial Ratios on Firm Performance: Study of Selected Brewery Firms in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45177.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/45177/effect-of-financial-ratios-on-firm-performance-study-of-selected-brewery-firms-in-nigeria/agbata-amaka-elizabeth
Apex Human Capital Index Report- IT industryMP Sriram
APEX-Human capital index is an analytical tool which analyses the value of human capital and its related aspects based on human capital and financial parameters. Human capital parameters constitute for 2/3rd part of the index while the remaining 1/3rd Weightage is determined by financial parameters. Each parameter is measured on a scale. The range of scale is determined by the criticalness of the ratio to the index. A total of 300 points is the Weightage of the index, (200 from Human Capital and 100 from financial parameters) and the components are clubbed into 7 key parameters. Organizational performance is measured on 300 points and the output points are converted in to rating which ranges from AAA to D, wherein AAA is the highest rating and D is the lowest rating. The APEX-HC Index’s 7 key parameters measurement is based on the composite score of each key parameter and finally a response is assigned to it. The assigned response is the representation of numerical percentage figure to simplify the ranking. Ranks range from “Very Good” to “Very Low”, where Very Good is the top end and Very Low is bottom end rank. In order to carry out the valuation of individual organization, the index needs at least two consecutive years’ human capital and financial data. Each year’s rating and key parameters’ ranking is evaluated and compared to come to the conclusions as in which year performance is better, which part of business need fresh investment and where the organization needs to improve etc., are some of the parameters that are considered.
The document is the February 2014 issue of the International Journal of Management. It contains an article titled "Creative Accounting & Window Dressing: An Empirical Analysis" which analyzes the prevalence of window dressing and creative accounting practices among private sector companies in India through a survey. The survey found that while window dressing is common, it depends on the accounting department's expertise. Some auditors were also found to encourage these practices for their own benefit. The study aimed to understand various window dressing tools and suggest remedies.
Las praxias son habilidades motoras complejas que requieren la coordinación de varios músculos y son necesarias para realizar tareas cotidianas. Algunas evidencias de praxias incluyen la capacidad de una persona para vestirse, alimentarse, lavarse los dientes y realizar otras actividades manuales diarias de forma independiente y coordinada.
The document discusses how digital technologies are transforming the world, with billions of connected people and devices generating zettabytes of data by 2020. It outlines EMC's dual innovation model of research/development and acquisitions to develop solutions across information storage, protection, intelligence, cloud platforms, and services. EMC aims to help organizations address challenges of agility, cost, and risk management through software-defined infrastructure, open cloud platforms, big data analytics, and intelligence-driven security.
CEESP - Análisis Económico Ejecutivo de 28 abril 2014ArenaPublica
El documento analiza la situación económica de México y Estados Unidos. En México, el crecimiento del IGAE fue de 1.74% en febrero, pero el consumo sigue estancado. La inflación fue de 3.53% y la tasa de desempleo subió a 4.8%. En Estados Unidos, las ventas de viviendas nuevas y usadas cayeron debido al endurecimiento de las condiciones de financiamiento y al aumento de precios de las viviendas. El documento argumenta que México necesita estimular la inversión privada para
Presentation on my theory-driven scenario method from the Scenario 2015: Improving Scenario Methodology conference held at Warwick Business School, December 14-15, 2015.
The document discusses various liquidity, activity, profitability, and leverage ratios calculated for a company from 2011-2014. The key ratios discussed are:
- Current ratio - Decreased each year from 1.36 in 2011 to 1.27 in 2014, with 2012 being the most acceptable at 1.39.
- Quick (acid-test) ratio - Ranged from 0.39 in 2011 to 0.49 in 2014, with 2012 being the most acceptable at 0.58.
- Inventory turnover - Ranged from 3.24 in 2011 to 5.07 in 2012, with 2012 having the highest turnover.
- Gross profit margin - Ranged from 8.26% in 2011 to
This document discusses liquidity ratios and how they can change based on a company's financial decisions. It defines two key liquidity ratios: the current ratio and acid test ratio. The current ratio measures current assets available to cover current liabilities, while the acid test only considers more liquid current assets. The document then demonstrates how taking on short-term debt or increasing capital can impact these ratios, making liquidity stronger by applying long-term resources to current assets but weaker by using short-term debt for fixed assets.
The document discusses ratio analysis, including identifying five common classes of ratios: liquidity, solvency, activity, profitability, and operating. It provides examples of common ratios within each class, such as current ratio and debt-to-equity ratio. The purposes of ratio analysis are also summarized, such as allowing managers to monitor performance and creditors to evaluate business solvency. Limitations of ratio analysis are noted.
1. The document is a student's project report on the financial ratio analysis of Wipro. It includes an acknowledgment section thanking various professors and institutions for their support and guidance.
2. There is a declaration by the student stating that the project is their original work and submitted for their Master's degree program.
3. The project contains a certificate from the student's teacher guide confirming they completed the research project on the given topic under their guidance.
Full Analyst Report: IntelGenx Tech. Rating: Buy. IntelGenx Looking Towards A...Viral Network Inc
- The report provides an investment analysis of IntelGenx Technologies Corp (IGXT), assigning a "Buy" rating and $3 price target.
- Key catalysts in 2013 include expected acceleration in sales of IGXT's migraine drug Forfivo and regulatory submissions of new drug candidates.
- IGXT is developing novel formulations of existing drugs and recently appointed a new CEO to help expand partnerships.
In this paper, we used financial statements as the main information to calculate the enterprise
value by discounted cash flow model. For the prediction of future cash flows in DCF model, a new method
based on the Markov chain is proposed to get the growth rates of future cash flows, instead of the fixed growth
rate method. The superior performance of it can be illustrated in empirical analysis. And the result shows that
we can improve the accuracy of the enterprise value evaluation with partial information by using the Markov
chain
Mercer Capital's Value Focus: Medical Technology | Mid-Year 2016Mercer Capital
Mercer Capital's Medical Technology Industry newsletter provides perspective on valuation issues. Each newsletter also includes macroeconomic trends, public market trends, and comparable public company metrics.
This document provides a comparative assessment of the stock valuation of Intel Corporation and Texas Instruments. It uses both absolute and relative valuation models, including discounted dividend, free cash flow, residual income, and market multiples models. The analysis finds that while Intel derives around 50% of its valuation from PCs, even a large decline in its PC market share would likely have only a minor impact on its overall valuation. It also determines that Texas Instruments' shares are a reasonable investment given its annual dividend, dividend growth history, and discounted cash flow valuation of around $55.9 billion compared to its recent market price of $52.6 billion.
This document is a project report submitted by Mr. Ojas Nitin Narsale, an M.Com student at the Parle Tilak Vidyalaya Association's M.L. Dahanukar College of Commerce in Mumbai, India. The report is on the topic of ratio analysis and was completed in the 2016-2017 academic year under the guidance of Prof. Karim. The report includes an introduction, objectives, methodology, literature review on ratio analysis, calculations of key financial ratios for a company, analysis of the results, and a summary.
Economic value added (eva) and shareholders wealthAlexander Decker
This document summarizes a research study that examines the relationship between Economic Value Added (EVA) and shareholder wealth creation for selected automobile companies in India. The study uses factor analysis to identify factors that contribute most to shareholder wealth maximization. The results show that three factors were extracted from eight variables analyzed, explaining 69.902% of the total variance. Specifically, sales and profit after tax were found to have a stronger relationship with EVA than other variables. The document provides background on EVA and outlines the methodology used, including measurement of EVA, sample selection, and statistical analysis conducted.
11.economic value added (eva) and shareholders wealthAlexander Decker
This document summarizes a research study that examines the relationship between Economic Value Added (EVA) and shareholder wealth creation for selected automobile companies in India. The study uses factor analysis to identify factors that contribute most to shareholder wealth maximization. The results show that three factors were extracted from eight variables, explaining 69.902% of the total variance. Specifically, sales and profit after tax were found to have a stronger relationship with EVA than other variables. The document provides background on EVA and outlines the methodology used, including measurement of EVA, sample selection, and statistical analysis.
Century Auto Tech Pvt. Ltd. is an automotive components manufacturer founded in 1999 that now has annual turnover of Rs. 9.3 million. The document analyzes the company's financial statements from 2011-12 to 2012-13. Liquidity and solvency ratios are calculated, showing the company's current ratio, liquid ratio, debt-equity ratio, and proprietary ratio are below standards, indicating low short-term liquidity, high financial risk, and weak long-term financial position. The analysis suggests the company lacks working capital and its debt levels pose a danger to long-term lenders.
This document provides an overview and summary of The Progressive Corporation's 2006 Report on Loss Reserving Practices. The report examines Progressive's loss reserving process and how it affects their financial results. It includes sections on their financial objectives, how reserve development affects financial reporting, the different types of reserves, how reserves are estimated by segment, and recent process enhancements. The goal is to help stakeholders understand Progressive's loss reserving methodology and ensure reserves are adequate while developing with minimal variation over time.
Ratio Analysis of Samsung Electronics Co. Ltd.Nikita Jangid
This document provides an overview of ratio analysis and its significance. It begins by defining ratio analysis as the process of determining and interpreting numerical relationships based on financial statements. Ratios are calculated by dividing two relevant figures and can be used to assess various aspects of organizational performance such as profitability, liquidity, efficiency, and financial stability. The document then discusses the objectives and types of ratios, how ratios should be calculated and interpreted, and compares ratios to historical standards, industry benchmarks, and budgets. It emphasizes that ratios must be carefully analyzed in context. Finally, the document outlines the significance of ratio analysis for various stakeholders like management, owners, creditors, employees and governments in evaluating financial health and making informed decisions.
Effect of Financial Ratios on Firm Performance Study of Selected Brewery Firm...ijtsrd
The study assessed the effect of financial ratios on performance of Quoted Breweries firms in Nigeria. It made use of ex post facto research design. Data were gotten from secondary sources obtained from NSE fact books and annual reports accounts of the selected Breweries Companies. The population of the study consisted of thirteen 13 quoted Breweries firms listed on the Nigerian Stock Exchange as at 31st December, 2018. Four 4 of the quoted Breweries firms are selected to form the sample of the study for the period of nine 9 years 2010 – 2018 . The relevant data obtained were subjected to statistical analysis using Pearson correlation coefficient and regression analysis. The results of this study revealed that there is a significant relationship between current ratio and firm performance but negative effect. Debt equity ratio has a significant effect on return on asset of Nigerian Breweries. The result of the study concludes that Nigerian breweries companies are relatively using an optimal mix of debt to equity which is evident from the significant positive relationship of debt equity ratio with financial performance of the Nigerian Breweries. The researchers recommended that the management should employ all carefulness while financing with long term debt instruments endeavor to find out the best and optimal combination of long term debt and equity that will impact positively on the value of the firm. Agbata, Amaka Elizabeth | Osingor, Arinze Stanley | Ezeala, George "Effect of Financial Ratios on Firm Performance: Study of Selected Brewery Firms in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-5 , August 2021, URL: https://www.ijtsrd.com/papers/ijtsrd45177.pdf Paper URL: https://www.ijtsrd.com/management/accounting-and-finance/45177/effect-of-financial-ratios-on-firm-performance-study-of-selected-brewery-firms-in-nigeria/agbata-amaka-elizabeth
Apex Human Capital Index Report- IT industryMP Sriram
APEX-Human capital index is an analytical tool which analyses the value of human capital and its related aspects based on human capital and financial parameters. Human capital parameters constitute for 2/3rd part of the index while the remaining 1/3rd Weightage is determined by financial parameters. Each parameter is measured on a scale. The range of scale is determined by the criticalness of the ratio to the index. A total of 300 points is the Weightage of the index, (200 from Human Capital and 100 from financial parameters) and the components are clubbed into 7 key parameters. Organizational performance is measured on 300 points and the output points are converted in to rating which ranges from AAA to D, wherein AAA is the highest rating and D is the lowest rating. The APEX-HC Index’s 7 key parameters measurement is based on the composite score of each key parameter and finally a response is assigned to it. The assigned response is the representation of numerical percentage figure to simplify the ranking. Ranks range from “Very Good” to “Very Low”, where Very Good is the top end and Very Low is bottom end rank. In order to carry out the valuation of individual organization, the index needs at least two consecutive years’ human capital and financial data. Each year’s rating and key parameters’ ranking is evaluated and compared to come to the conclusions as in which year performance is better, which part of business need fresh investment and where the organization needs to improve etc., are some of the parameters that are considered.
The document is the February 2014 issue of the International Journal of Management. It contains an article titled "Creative Accounting & Window Dressing: An Empirical Analysis" which analyzes the prevalence of window dressing and creative accounting practices among private sector companies in India through a survey. The survey found that while window dressing is common, it depends on the accounting department's expertise. Some auditors were also found to encourage these practices for their own benefit. The study aimed to understand various window dressing tools and suggest remedies.
Las praxias son habilidades motoras complejas que requieren la coordinación de varios músculos y son necesarias para realizar tareas cotidianas. Algunas evidencias de praxias incluyen la capacidad de una persona para vestirse, alimentarse, lavarse los dientes y realizar otras actividades manuales diarias de forma independiente y coordinada.
The document discusses how digital technologies are transforming the world, with billions of connected people and devices generating zettabytes of data by 2020. It outlines EMC's dual innovation model of research/development and acquisitions to develop solutions across information storage, protection, intelligence, cloud platforms, and services. EMC aims to help organizations address challenges of agility, cost, and risk management through software-defined infrastructure, open cloud platforms, big data analytics, and intelligence-driven security.
CEESP - Análisis Económico Ejecutivo de 28 abril 2014ArenaPublica
El documento analiza la situación económica de México y Estados Unidos. En México, el crecimiento del IGAE fue de 1.74% en febrero, pero el consumo sigue estancado. La inflación fue de 3.53% y la tasa de desempleo subió a 4.8%. En Estados Unidos, las ventas de viviendas nuevas y usadas cayeron debido al endurecimiento de las condiciones de financiamiento y al aumento de precios de las viviendas. El documento argumenta que México necesita estimular la inversión privada para
Presentation on my theory-driven scenario method from the Scenario 2015: Improving Scenario Methodology conference held at Warwick Business School, December 14-15, 2015.
El documento describe varias tecnologías de la información y comunicación clave. Google se ha posicionado como el buscador más utilizado a nivel mundial y ofrece una variedad de servicios gratuitos. La telefonía móvil se ha masificado en la última década y mejorado sustancialmente sus servicios y aplicaciones. Internet de banda ancha ha democratizado los medios pero también plantea riesgos.
Crear un blog requiere 9 pasos: 1) crear una cuenta de Gmail, 2) crear el blog en Blogger eligiendo título, dirección y plantilla, 3) crear la primera entrada explicando el tema del blog, 4) editar el blog agregando gadgets e imágenes, 5) personalizar la plantilla cambiando el fondo, 6) compartir el blog en SlideShare subiendo la presentación, 7) insertar la URL de SlideShare en una nueva entrada en HTML, 8) agregar un reproductor de música eligiendo su apariencia y lista de canciones
This profile is for a 17-year-old male who enjoys hanging out with friends, going to local music gigs, and listening to rock, indie, and punk bands like The Killers, The Hives, and The White Stripes. He plays the drums and is studying for his A-Levels, often listening to music on the bus or during coursework. He likes shopping at River Island, Burton, and local vintage shops, and considers music a big part of his life.
This document provides a list of technical elements and techniques used in filmmaking and visual media including camerawork, editing, sound, iconography, mise-en-scene, graphics, and messages. It covers shot types, angles, movement, pace, techniques, sound effects, soundtrack, dialogue, narration, framing, composition, lighting, color, structures and the emotional responses they can elicit from viewers.
Examining Neurobehavioral Toxicity of Patulin in Adult ZebrafishQuang Nguyen
The content of this PowerPoint is strictly for the purpose of submission to the Sigma Xi Research Showcase. Please do not quote/cite/reference materials in this file in its entirety. I am not responsible for any misrepresentation of its reproduction. Any reproduction must have the author's written approval.
Otherwise, I hope you enjoy the slides.
Check out my page at http://patulinzebrafish.tumblr.com/
The document outlines David Rose's vision for an "enchanted city" with 10 key aspects: 1) improved mobility systems, 2) adaptable city homes, 3) responsive public spaces, 4) an expanded sharing economy, 5) the future of shopping, 6) opportunities for play, 7) innovative utilities, 8) local food production, 9) reimagined workspaces, and 10) a redefinition of beauty. The city aims to address issues like pollution and segregation through new transportation, housing, and community designs that are sustainable, connected, and encourage social interaction.
Market equilibrium and application of demand and supply theoryOnline
The document discusses key concepts in supply and demand including:
1. Market equilibrium is reached at the price where quantity demanded equals quantity supplied.
2. Surpluses and shortages occur when quantities demanded and supplied are not equal.
3. Demand and supply curves can shift due to various factors, impacting equilibrium price and quantity.
4. Price controls like price floors and ceilings can cause surpluses or shortages and unintended consequences.
5. Elasticity measures responsiveness of quantity to price changes and depends on availability of substitutes, budget share spent, and other factors.
The document discusses water as an important design element in landscape architecture. It describes how water has been used historically by landscape architects to add visual interest and break up monotonous solid materials. Water can be perceived and have different meanings depending on the observer. The document then discusses water's multidimensional nature and how it relates to the environment, society, culture, finances, and aesthetics. Specific landscape values of water like sound, movement, and reflection are also mentioned. Different techniques for incorporating water features like fountains, ponds, and streams are outlined.
- India is the second largest cement producer globally and is expected to reach 550 million tons of annual production capacity by 2020, dominated by private players. Cement demand is recovering faster than expected.
- ACC is uniquely positioned to benefit from India's cement market growth, with over 10% market share. However, high operating costs and vintage plants may hamper its growth.
- This project evaluates ACC using a discounted cash flow valuation and determines the stock is currently overvalued based on fundamental analysis. A conservative intrinsic valuation approach is used.
This document provides a financial analysis of Saudi Telecom Corporation (STC) and a comparison with its competitor Mobily. It includes a SWOT analysis, industry analysis using Porter's Five Forces, and an analysis of key financial ratios for STC. It also discusses sources of internal and external finance available to STC, budgeting, and concludes with recommendations for performance enhancement. Financial data for STC such as net revenue, net income, cash flow, market capitalization, and dividend yield are presented alongside the same metrics for Mobily to facilitate comparison between the two companies.
The Institute of Chartered Accountants in Australia has release its latest leadership paper, Broad Based Business Reporting. The requirements for BBBR by business have intensified in line with the demand for greater
accountability and insight into sustainability performance from the Government and the public in general. This paper provides a pro-forma of key performance indicator reporting as well as a starting point for discussion on possible KPIs for certain industries.
http://www.charteredaccountants.com.au
Building a Holistic Capital Management FrameworkCognizant
For banks, capital management strategy is a complex process that must take into account a vast range of regulatory and financial factors. Adopting the holistic approach detailed here will enable banks to provide sustainable value to their clients.
This document discusses financial statement analysis and calculation of financial ratios. It begins by outlining the key elements of a thorough financial analysis, including historical and adjusted balance sheets, income statements, common-size statements, cash flows, and selected financial ratios compared over time and against industry benchmarks. The document then explains common-size analysis and its importance in identifying trends and facilitating comparisons. Finally, it discusses ratio analysis, noting its usefulness in business valuations for trend and comparative analyses, and identifying five categories of key financial ratios to consider.
chapter 8Responsibility Concepts and Sound Decision-Maki.docxchristinemaritza
chapter 8
Responsibility Concepts and Sound
Decision-Making Analytics
Learning Objectives
• Understand concepts in responsibility accounting.
• Be able to provide a framework for rational business decision making, and understand
how to apply these concepts for specific types of situations.
• Apply capital budgeting methods and discounted cash flow concepts.
• Know how to make proper long-term investment decisions.
istockphoto
waL80281_08_c08_189-212.indd 1 9/25/12 1:03 PM
CHAPTER 8Section 8.1 Responsibility Accounting Concepts
Chapter Outline
8.1 Responsibility Accounting Concepts
Accumulation of Information to Match Centers
Management by Exception
Rational Decision Making
Sunk Costs
8.2 A General Framework for Making Sound Business Decisions
Applying the General Framework to an Example: Bulk Orders
Applying the General Framework to an Example: Offshoring
8.3 Capital Expenditures
Future Value
Annuity
Present Value
8.4 Making Decisions About Long-Term Investments
Net Present Value
Internal Rate of Return
Simpler Capital Budgeting Methods
Recap of Using Capital Budgeting Tools for Decision Making
8.1 Responsibility Accounting Concepts
In general, managers should be held accountable for the results of their decisions and business execution. Without accountability based on performance-related feedback, the
business will not perform at its best, and areas in need of improvement may not be iden-
tified on a timely basis. Business feedback is often based on financial results. You have
already seen how budgets and variances are used to help identify areas for improvement.
Because managers are accountable for their decisions, actions, and outcomes, their perfor-
mance measures should align around the department, product, division, or other business
for which they are responsible. In other words, the attribution of responsibility tends to
follow the organizational structure of the business.
Sometimes, a business has a highly dispersed design, with decisions nested with lower
level managers. Other businesses generate decisions only at the upper levels, and
lower level personnel are basically charged with execution of defined actions. Proper
implementation of responsibility accounting concepts stipulates that performance mea-
sures be aligned with the business organization structure. In other words, accountability
should map to responsibility. Proper design of performance measurement systems there-
fore requires that the management accountant carefully consider the organizational struc-
ture. Sometimes performance measures are only appropriate on an aggregated basis, such
as where the organization is structured as a top–down, command-and-control, central-
ized decision-making entity. As lower level managers are given increased authority, so
too should the accountability system be modified to provide more disaggregated perfor-
mance measures. Although quite logical, this presents measurement challenges.
waL80281_ ...
This document analyzes the international banking sector. It provides details about VIT Business School and introduces the banking sector. It then analyzes the top 10 banks' market shares, with JP Morgan Chase having the largest at 65.27%. It also calculates labor-capital ratios for these banks, with ICBC Bank of China having the lowest ratio of 0.11. The document concludes that most bank revenue comes from net interest and that banks play an important economic role through activities like money issuance, payments, and credit intermediation.
FOR DISCLOSURES AND OTHER IMPORTANT INFORMATION, PLEASE RE.docxAKHIL969626
FOR DISCLOSURES AND OTHER IMPORTANT INFORMATION, PLEASE REFER TO THE BACK OF THIS REPORT.
November 1, 2016
GLOBAL FINANCIAL STRATEGIES
www.credit-suisse.com
Measuring the Moat
Assessing the Magnitude and Sustainability of Value Creation
Authors
Michael J. Mauboussin
[email protected]
Dan Callahan, CFA
[email protected]redit-suisse.com
Darius Majd
[email protected]
“The most important thing to me is figuring out how big a moat there is around
the business. What I love, of course, is a big castle and a big moat with piranhas
and crocodiles.”
Warren E. Buffett
Linda Grant, “Striking Out at Wall Street,” U.S. News & World Report, June 12, 1994
Sustainable value creation is of prime interest to investors who seek to
anticipate expectations revisions.
This report develops a systematic framework to determine the size of a
company’s moat.
We cover industry analysis, firm-specific analysis, and firm interaction.
mailto:[email protected]
mailto:[email protected]
mailto:[email protected]
November 1, 2016
Measuring the Moat 2
Table of Contents
Executive Summary ................................................................................................................................ 3
Introduction ............................................................................................................................................ 4
Competitive Life Cycle ................................................................................................................. 4
Economic Moats ......................................................................................................................... 7
What Dictates a Company’s Destiny? ........................................................................................... 8
Industry Analysis ................................................................................................................................... 10
The Lay of the Land .................................................................................................................. 11
Industry Map ................................................................................................................. 11
Profit Pool .................................................................................................................... 13
Industry Stability ............................................................................................................ 15
Industry Classification .................................................................................................... 17
Industry Structure – Five Forces Analysis .................................................................................... 18
Entry and Exit ............................................................................................................... 19
Competitive Rivalry .................................. ...
The document discusses factors that may explain differences in price-earnings (P/E) ratios for five companies. P/E ratios can vary based on a company's share price and earnings. For example, Burberry's P/E ratio fell in 2009 along with its share price, while EasyJet's P/E rose as its earnings fell more than its share price. Additional factors like industry comparisons and one-time expenses must also be considered to fully understand differences in P/E ratios. The document provides examples and discussion of how P/E ratios are calculated and influenced by share prices and earnings over time.
The document discusses factors that may explain differences in price-earnings (P/E) ratios for five companies. P/E ratios can vary based on a company's share price and earnings. For example, Burberry's P/E ratio fell in 2009 along with its share price, while EasyJet's P/E rose as its earnings fell more than its share price. Additional factors like industry comparisons and one-time expenses must also be considered to fully understand differences in P/E ratios. The document provides examples and discussion of how P/E ratios are calculated and influenced by share prices and earnings over time.
The document analyzes financial models for evaluating investment opportunities, including net present value and internal rate of return. It examines profit and loss statements and cash flow statements for a company considering a new product investment. Key assumptions specified include capital allowances discounted over 6 periods, direct manufacturing costs, overhead costs, and fixed costs directly related to the new product. The analysis determines the investment's net present value and internal rate of return using the cash flow statements and specified assumptions.
This document discusses planning and strategy for small- and medium-sized accounting firms. It addresses questions around whether firms should specialize or generalize, the need for business planning, developing plans for key firm functions, risk management, and monitoring external forces. The document provides guidance on strategic planning processes and implementing plans through practice manuals and systems. It emphasizes regularly reviewing strategy and adapting plans as the environment changes.
The document discusses the analysis of financial statements. It provides an introduction to financial statement analysis, explaining that it allows users to gauge a company's past and projected future performance. It then covers various tools for financial statement analysis, including comparative statements, common size statements, trend analysis, and ratio analysis. The document also discusses the objectives and significance of financial statement analysis for different users including managers, investors, and the public.
SPIMACO is a large Saudi pharmaceutical company with over $1.2 billion in capital. A SWOT analysis identified strengths like revenue growth and new product introductions, but also weaknesses such as declining earnings per share, gross profit margins, and net profit margins. Opportunities exist in mergers and acquisitions, utilizing local Saudi workers, and data analytics to improve customer insights. Threats include investor resistance due to low EPS, ensuring local workers are adequately trained, and competitive product pricing. Recommendations include focusing on top customers, reducing costs, innovating products, strengthening customer relationships, and using digital transformation to improve efficiency.
The document summarizes key findings from Aberdeen Group's 2006 Invoice Reconciliation and Payment Benchmark Report. It finds that most companies have limited visibility into spending due to a reliance on paper invoices and lack of integrated systems. Only 4% of surveyed companies have real-time visibility into costs. It recommends that companies automate invoice processing, manage payment terms, leverage financial institution services, and integrate source-to-pay systems to improve visibility into spending and manage costs.
The Institute of Chartered Accountants in Australia is pleased to release the supplementary
paper to its 2008 thought leadership paper, Broad Based Business Reporting – The complete reporting tool.
This original paper provided an overview of Broad Based Business Reporting (BBBR), including the
importance of financial and non-financial key performance indicators (KPIs) and ways to incorporatenon-financial KPIs into existing reporting. The original paper should be read in conjunction with thissupplementary paper.
http://www.charteredaccountants.com.au
Regulatory capital management under Basel 3 and FRTB is about to become much more complicated. Our paper outlines a process to optimize you desk framework under the new regulatory framework.
Supply Chain Metrics That Matter: A Critical Look at Operating Margin -10 DEC...Lora Cecere
This document provides a summary and analysis of operating margin performance across several industries from 2000-2012. It finds that operating margin, a key measure of profitability, has become increasingly difficult for most companies to improve over the long-term. Only the consumer electronics and consumer packaged goods industries saw average operating margin increases. The document examines operating margin trends and balancing priorities like inventory turns for several industries, finding that less than 40% of the companies profiled improved their margin from 2000-2012. It provides recommendations for improving operating margin through benchmarking, process focus, strategic alignment, and planning.
This document provides a strategic audit of Walmart conducted by a team of business students. It begins with an overview of Walmart's history and current performance, including a financial ratio analysis comparing Walmart to competitors and industry averages. Walmart's mission, objectives, and strategic posture involving corporate strategy, business strategy, and functional strategies are then examined. The document also analyzes Walmart's external opportunities and threats through a PESTEL analysis and internal strengths and weaknesses through a VRIO analysis. Strategic recommendations are provided based on a TOWS matrix analysis. An implementation plan and balanced scorecard for evaluation are also included.
This document analyzes the financial ratios of Sample Company using its financial statements from December 31, 2000. Various profitability ratios are calculated, including return on investment (ROI), return on equity (ROE), operating margin, net profit margin, and price-earnings ratio. Sample Company's ROI of 4.8% and ROE are below industry averages. Liquidity, activity, and financial leverage ratios are also examined but not discussed in detail. Historical trends and comparisons to industry benchmarks are used to evaluate Sample Company's financial performance. Recommendations for improvement are not provided.
1. 1
RaySearch Laboratories: a financial analysis
Executive summary
RaySearch has the fundamental goal to establish itself as the leading provider of treatment
planning systems for radiation therapy. Registered on the mid cap segment of the Nasdaq
OMX Stockholm, RaySearch represents a growing contributor to the global sector.
Recent results have stimulated further investment in the company, which has experienced
an almost doubling of its share price over the past year. An evaluation of profitability,
liquidity and solvency confirms that the fundamentals underlying performance are strong.
Relative to its peers, RaySearch continues to outperform the market, generating high
relative returns while maintaining low financial risk.
Overcoming a 2013 lawsuit, the company appears to be on target to reap further gains from
its investment into RayStation, its flagship product. As sales continue to increase, investors
are anticipating accelerated future cash flows to justify their purchase. With a strong
financial and strategic foundation, RaySearch represents an opportunity for investors to
partner with an increasingly successful business model.
3. 3
1. Introduction
RaySearch Laboratories is a medical technology company that creates advanced software
solutions for improved radiation therapy treatment of cancer. RaySearch was founded in
2000 and is a Swedish registered limited liability company headquartered in Stockholm
(‘Annual report’ 2014).
The parent company’s shares are now listed on the mid cap segment of Nasdaq OMX
Stockholm, with a subsidiary group consisting of five foreign based sales companies –
RaySearch Americas, RaySearch Belgium, RaySearch France, RaySearch UK and RaySearch
Germany (‘Advancing cancer treatment’ 2015).
Annual reports are prepared in accordance with the Swedish Annual Accounts Act
(1995:1554) and the Swedish financial reporting board’s recommendation RFR 2 Accounting
for Legal Entities (‘Annual report’ 2014). All financial statements are presented in Swedish
Krona (SEK).
2. Profitability evaluation
RaySearch’s fundamental goal is to establish itself as the leading provider of treatment
planning systems for radiation therapy (‘Advancing cancer treatment’ 2015). Its long-term
financial target is to have high sales growth and earnings before interest and taxes (EBIT)
margin exceeding 30 percent (‘Annual report’ 2014, p. 10). These targets focus on
profitability and trends, and can serve as the focus of analysis.
2.1 EBIT margin
Higher EBIT margins indicate higher profitability. By dividing operating earnings over net
sales (appendix 1) RaySearch’s 2014 EBIT ratio can be calculated at 27.8 percent - close to
the specified target. Often used interchangeably with operating margin (‘What is the
difference between EBIT and operating income?’ 2016), these ratios allow investors to
understand the true business costs of running the company.
Maverick (2015) describes the operating margin as a ‘key determinant in evaluating growth
potential’ and ‘essential in the assessment of management efficacy’. The margin
incorporates the effectiveness of capital management and the reliance of the business on
capital resources. As a specific EBIT target was mentioned annual report (‘Annual report’
4. 4
2014, p. 10), the subtle differences between an EBIT ratio and operating margin should be
examined:
2.2 Generally accepted accounting principles (GAAP)
Corporate accounting is required to adhere to the standard conventions known as the
generally accepted accounting principles (GAAP). The terms gross profit margin, operating
profit margin and net profit margin generally refer to one of three key GAAP-approved
measures of profitability. GAAP profit margin calculations are standardised, enabling reliable
competitive analysis.
Non-GAAP profitability metrics such as EBIT and EBITDA (earnings before interest, taxes,
depreciation and amortization) may bear close resemblance to GAAP counterparts but may
hide crucial differences. Boyte-White (n.d.) explains:
…gross profit reflects revenue minus only those costs directly associated with
production of goods for sale. Operating profit is equal to gross profit minus any other
overhead, operational or sales expenses necessary to run the business, including
depreciation and amortization of assets. EBITDA essentially splits the difference
between these two metrics by accounting for all expenses generated by production
and day-to-day operations, but adding back in the cost of depreciation and
amortization.
Prudent profitability evaluation includes analysis of GAAP profitability margins along with
EBIT and EBITDA metrics.
2.3 Profit margin
Using the net profit margin ratio, the expense of gearing can be included (AIB, Topic 2,
appendix 2, Parameters of assessing business performance: summary of financial ratios
2015). Often referred to simply as the profit margin, the net profit margin is considered one
of the most crucial indicators of a company's financial health (Boyte-White n.d.).
RaySearch’s net profit margin of 27.6 percent (appendix 2) represents an exceptional return
in absolute terms (AIB, Topic 2, appendix 2, Parameters of assessing business performance:
summary of financial ratios 2015), as does a gross profit margin of 95.9 percent (appendix
3).
5. 5
2.4 Relative profitability
Determining the company’s performance relative to the industry is fundamental to
adequate performance evaluation. Bloomberg groups RaySearch into the Health Care
Equipment & Services industry within the health care sector, where it’s metrics sit amongst
other comparable European companies (‘Health care equipment & services industry’ 2016).
Comparisons with the European subset are limited, with the sample size presenting an
obstacle to reliable appraisal. Comparisons with the US market present an alternative where
the industry averages are drawn from a larger pool companies, some of which have been
identified as direct competitors (‘Annual report’ 2014, p. 29). The 27.6 percent net profit
margin posted by RaySearch in 2014 is considerably above the US industry average of 10.6
percent and the sector average of 16.7 percent (‘Industry information’ 2015).
RaySearch’s profitability becomes even more impressive when global comparisons are
produced. Gurufocus calculates the industry net profit median at 3.2 percent, listing
RaySearch as a high performer among 1750 companies within the global software –
application industry (‘RaySearch Laboratories AB’ 2016). The global operating margin
industry average of 4.7 percent is also radically outperformed by RaySearch.
As a global company with multiple foreign based subsidiaries, RaySearch identifies its major
competitors as Varian, Elekta and Phillips (‘Annual report’ 2014, p.29). Accuray is another US
competitor. Comparisons between these publically listed companies are presented in table
1:
Table 1: Relative profitability
2014 Net profit margin
(%)
Operating margin
(%)
Relative net profit
performance (%)
Global Industry Average 3.2 4.7 0
RAYSEARCH 27.6 27.8 +24.4
VARIAN 13.3 17.7 +10.1
ELEKTA 4.8 8.4 +1.6
PHILLIPS 3.5 4.2 +0.3
ACCURAY -8.2 -2.9 -11.4
(‘RaySearchLaboratoriesAB’2016)
6. 6
Caution should be used in industry average comparisons, as determining relative
profitability is greatly affected by the included subset of companies. Published averages are
approximate, reporting practices vary, and operational seasonality can led to deceptive data
and misleading comparisons (Petty et al. 2012, pp. 161-162). However the results posted by
RaySearch far outreach this uncertainty: it is clear that its recent profitability has far
exceeded that of its peers.
2.5 Return on total assets
Measuring the return on asset investment allows operations management profitability to be
assessed. This formula ignores financing and evaluates how well assets are utilised to create
wealth, regardless of capital structure (AIB, Topic 2, appendix 2, Parameters of assessing
business performance: summary of financial ratios 2015). RaySearch delivers a return on
total assets (ROA) of 20.4 percent (appendix 4), again outperforming an industry which
averages just over 3 percent (‘RaySearch Laboratories AB return on assets’ 2016).
Similar to return on equity (ROE), ROA is affected by profit margins and asset turnover. This
can be seen when broken down by the Du Pont Formula; a method that seeks to
demonstrate the various interrelationships involved in ratio analysis:
Figure 1: Du Pont analysis on ROA
(Fahimn.d.)
7. 7
Whilst many analysts argue that a higher ROA is superior, Buffett states that a high ROA may
indicate vulnerability in the durability of the competitive advantage (‘RaySearch
Laboratories AB return on assets’ 2016). Petty et al.’s (2012, p. 13-15) principal 5 also
alludes to the potential vulnerability of exceptionally profitable projects ‘…in competitive
markets, extremely large profits cannot exist for very long’.
RaySearch seeks to maintain its relatively high ROA by driving innovation and differentiating
its main product, RayStation (‘Annual report’ 2014, p. 1). Petty at al. (2012 p. 14) describes
this strategy as creating markets that are not ‘perfectly competitive’, allowing for insulation
from potential rivals.
3. Liquidity evaluation
Nuzum (2016) notes that a decline in liquidity increases the risk of bankruptcy. RaySearch’s
current ratio sits at 3.77, providing an indication that it is well equipped to pay short term
obligations (appendix 5). With a global industry median of 2.1 (‘RaySearch Laboratories AB
current ratio’ 2016), RaySearch attributes it’s highly liquid financial position to a ‘substantial
rise in sales…at the end of the period’ (‘Annual report’ 2014, p. 2). This is congruent with the
trend analysis, which is further examined in section 5. The explanation also allays fears that
the high liquidity may be due to poor working capital management.
4. Solvency evaluation
As insolvency is one of top reasons businesses fail (Nuzum 2016), assessing solvency is
critical to determining the risk associated with a potential investment. In keeping with the
board’s financial risk management policy (‘Annual report’ 2014, p. 5), RaySearch’s debt ratio
has continued to be kept low (appendix 6). This indicates potential to finance new assets
with debt, such as research and development (‘Annual report’ 2014, p. 16).
The debt-equity ratio (appendix 7) is another indicator of low financial risk, a feature
required of companies with higher operational risk (AIB, Topic 2, appendix 2, Parameters of
assessing business performance: summary of financial ratios 2015). These operational risks
are identified as dependence on key personal and partnerships, competition, regulatory
approval and reliance on insurance rebates (‘Annual report’ 2014, pp. 28-29).
8. 8
5. Trends analysis
Ratios employed in financial analysis draw on measures from both the balance sheet
(position) and the income statement (performance) (AIB, Topic 2: Financial accounting
concepts and statements: financial analysis 2015). These figures become a greater tool
when compared with historical data:
Figure 2: Multi-year overview
(‘Annual report’ 2014, p. 6)
9. 9
By calculating ratios from the published data, trends become apparent. Table 2 shows the
redacted ratios:
Table 2: Trends analysis
RATIO 2014 2013 2012 2011 2010
EBIT (%) 27.8 -12.6 12.4 21.9 33.9
Net profit (%) 27.6 -12.2 12.9 22.8 34.1
Gross profit (%) 95.9 97.0 98.3 99.7 99.9
ROA (%) 20.4 -8.6 7.7 10.6 15.6
Current 3.77 2.88 3.58 5.35 6.86
Particular 2013 profitability ratios become an immediate cause for further investigation. The
EBIT, net profit and ROA margins exhibit a significant negative deviation in trend.
Examination of the annual report (2013, p. 5) showed that the significant decline in profit
was primarily due to a legal settlement:
In May 2011, we were sued by the US company Prowess, which claimed that we had
infringed on a patent that they license…this resulted in a settlement agreement with
Prowess. Under this agreement RaySearch will pay Prowess a fixed amount spread
out over three years and Prowess will drop the lawsuit. Since the outcome of the
settlement pertains to events prior to the close of 2013, a provision covering the
entire settlement amount was posted in the 2013 annual accounts.
The total cost of the settlement was SEK 34.8M and was charged entirely to 2013 (‘annual
report’ 2013, p. 44). The ‘Prowess effect’ can be observed clearly in figure 3:
10. 10
Figure 3: Profitability trends
(‘RaySearchLaboratoriesAB15-yearfinancials’2016)
Prior to 2013 a trend of negative profit growth is observed. This is despite the ongoing
increased sales reported in figure 2. The annual report (2012, pp. 5, 50) proffers the
following explanation:
The fact that profit increased proportionately less than revenue was due primarily to
the build-up of infrastructure for selling and marketing RayStation, which led to
higher costs…the increase in operating expenses derived mainly from higher
marketing and personnel costs.
The investment into the flagship product, RayStation, is realised in the increased research
and development expenditure as well as in other operating expenses (figure 2). The rise
over the period accords with the 2012 release date of RayStation.
A turnaround in this trend occurs in 2014 and has been sustained in the interim reports of
2015 (‘Financial reports’ 2015). Trailing twelve months (TTM) profitability now appears
highly favourable when compared to the five year average:
11. 11
Figure 4: TTM vs 5 Year average profitability margins
(‘RaysearchLaboratoriesAB:financials’2016)
6. Stock valuation
RaySearch’s share capital amounts to SEK 17,141,386.50 (‘Annual report’ 2014, p. 44). The
34,282,773 shares are comprised of 11,324,391 Class A shares and 22,958,382 Class B
shares (‘Annual report’ 2014, p. 44). The quotient value per share is SEK 0.50 (appendix 8).
During 2014, the average price of traded shares was SEK 37.9, up from 27.7 (2013). The
traded shares ranged in value from SEK 26.5 to SEK 54.0, with the price rising 93 percent on
year end whilst the Swedish market (OMX) increased 12 percent (‘Annual report’ 2014, p.
44).
Figure 5: Share price trend diagram
(‘Annual report’2014, p. 46)
12. 12
On the last trading day of 2014 the closing price was SEK 53.0. This equated to a price to
earnings (P/E) ratio of 30.3 (appendix 9). Since then the price has continued to appreciate,
rising to a current SEK 104 (13 Jan 2016), significantly outperforming competitors:
Figure 6: Relative share performance
(‘BloombergBusiness’2016)
The TTM P/E ratio has elevated to 45.9, significantly above the global industry average of
24.8:
Table 3: Relative P/E ratios
Jan 2016 TTM P/E
ratio
Global industry average 24.8
US industry average 42.1
OMX index average 15.7
RAYSEARCH 45.9
VARIAN 18.1
ELEKTA 42.9
PHILLIPS n/a
ACCURAY n/a
(‘RaySearchLaboratoriesAB’2016); (‘Industryinformation’2015);(‘BloombergBusiness’2016)
13. 13
In an efficient market, the high P/E ratio would an indicator of the expected growth in
company earnings. However to ensure that the stock is not subject to a speculative bubble,
other methods of evaluating the intrinsic or fair value should be considered. The intrinsic
value of an ordinary share is equal to the present value of all future cash flows expected to
be received by the investor (Petty et al. 2012, p. 340).
6.1 Book value
The 2014 book value per ordinary share was found to be SEK 7.34 (appendix 10). This has
remained stable (SEK 5.73 – 7.34) over the past five reporting years. The increasing share
price has elevated the price to book (P/B) ratio from 7.2 to a current 12.4 (appendix 11),
well above the global industry median of 2.4 (‘RaySearch Laboratories AB’ 2016). ‘RaySearch
Laboratories AB P/B ratio’ (2016) makes the observation that the P/B ratio works best for
companies that earn most of their profit from underlying assets, such as banks. It has
limited value for software companies with light assets.
6.2 Valuation models
RaySearch has a policy to pay as dividends approximately 20 percent of the Group’s net
profit on condition that a ‘healthy capital structure is retained’ (‘Annual report’ 2014, p. 46).
Despite recent net profits, no dividends have been paid since 2010.
If earnings are expected to grow at a constant rate, the dividend growth valuation or
dividend discount model may a useful tool to estimate the value of an ordinary share (Petty
et al. 2012, p. 356). By applying a hypothetical 5% dividend growth rate and a required rate
of return of 10%, the 2010 intrinsic value was calculated to be SEK 10 per share (appendix
12a). Different outcomes may be obtained by substituting variables, such as those shown in
appendix 12b and appendix 12c. Appendix 12b also demonstrates the application of the
PVDG model, a tool useful in demonstrating the present values of both the non-growth and
earnings streams (Petty et al. 2012, p. 358).
With a current market value of SEK 104 (13 Jan 2016), it is clear that the market is still
expecting a further acceleration in growth. Irons (2014) addresses this phenomenon with an
enhanced dividend discount model. Designed to deal with a changing growth rate, the
model is particularly applicable for businesses in the growth phase of their lifecycle. Based
on conservative assumptions, the model estimates the current intrinsic value to be SEK 41.5
14. 14
(appendix 13). The current market value suggests assumptions are less conservative, with
traders placing a higher premium on expected future cash flows.
7. Conclusion
The retention of profits is an indirect route for shareholders to increase their ROE (Petty et
al. 2012, p. 341). As a growth company, investors are relying on future cash flows to justify
their purchase, rather than on current dividends. The intrinsic value is based on this
perception, taking account of the amount, timing and riskiness of future cash flows (Petty et
al. 2012, p. 331). The performance evaluation identified significant underlying strengths in
the company. These fundamentals have been recognised by investors and are reflected in
the share price.
8. Recommendation
When the market is functioning efficiently, the market value and intrinsic value of a stock
will be equal (Petty et al. 2012, p. 332). This assumes values fully reflect all available
information and investors are rational, which, according to behavioural finance theory, is
not always the case (Petty et al. 2012, p. 332).
A close analysis of the company and the dynamics of the industry may give an investor an
advantage when identifying risk and potential future cash flows. Inside industry knowledge
may further enhance this advantage, particularly when such information is not readily
comprehensible to the market.
With a strong financial and strategic foundation for a future acceleration in growth,
RaySearch represents an opportunity for investors to partner with an increasingly successful
business model.
15. 15
References
‘Advancing cancer treatment’ 2015, About Raysearch, viewed 5 Jan 2016,
http://www.raysearchlabs.com/about/About-RaySearch/
‘Annual report’ 2009, Investor relations, viewed 11 Jan 2016,
http://www.raysearchlabs.com/investor/financial-reports/?year=2010
‘Annual report’ 2010, Investor relations, viewed 11 Jan 2016,
http://www.raysearchlabs.com/investor/financial-reports/?year=2011
‘Annual report’ 2011, Investor relations, viewed 11 Jan 2016,
http://www.raysearchlabs.com/investor/financial-reports/?year=2012
‘Annual report’ 2012, Investor relations, viewed 11 Jan 2016,
http://www.raysearchlabs.com/investor/financial-reports/?year=2013
‘Annual report’ 2013, Investor relations, viewed 11 Jan 2016,
http://www.raysearchlabs.com/investor/financial-reports/?year=2014
‘Annual report’ 2014, Investor relations, viewed 5 Jan 2016,
http://ar.raysearchlabs.com/en/index.html
Australian Institute of Business (AIB), 2015, ‘Topic 2: appendix 2 - Parameters of assessing
business performance - summary of financial ratios’ in Financial Management Learning
Materials, AIB, Adelaide.
Australian Institute of Business (AIB), 2015, ‘Topic 2: Financial accounting concepts and
statements: financial analysis ’ in Financial Management Learning Materials, AIB, Adelaide.
‘Bloomberg business’ 2016, Bloomberg, viewed 17 Jan 2016,
http://www.bloomberg.com/quote/RAYB:SS
Boyte-White, C n.d., ‘What is the difference between EBITDA margin and profit margin?’,
viewed 5 Jan 2016, http://www.investopedia.com/ask/answers/032715/what-difference-
between-ebitda-margin-and-profit-margin.asp
Fahim, T n.d., ‘Finance for non-financial managers’, viewed 9 Jan 2016,
http://www.slideshare.net/AhmedElAty/lep-finanace-investment
‘Financial reports’ 2015, Investor relations, viewed 11 Jan, 2016,
http://www.raysearchlabs.com/investor/financial-reports/?year=2015
‘Health care equipment & services industry’ 2016, Bloomberg Business, viewed 5 Jan 2016,
http://www.investing.businessweek.wallst.com/research/sectorandindustry/industries/indu
strydetail.asp?region=Europe
‘Industry information’ 2015, Hemscott Americas, viewed 5 Jan 2016,
http://biz.yahoo.com/p/521conameu.html#var
Irons, R 2014, ‘Enhancing the dividend discount model to account for accelerated share
price growth', Journal of Accounting and Finance, vol. 14, no. 4, pp. 153–159.
16. 16
Maverick, J 2015, ‘Key financial ratios to analyze the healthcare industry’, viewed 5 Jan
2016, http://www.investopedia.com/articles/active-trading/082015/key-financial-ratios-
analyze-healthcare-industry.asp#ixzz3vhhaW65D
Nuzum, T 2016 ‘HD sample assignment extract for you’, Financial Management Discussion
Forum, 12 Jan 2016, viewed 18 Jan 2016,
https://moodle.aib.edu.au/mod/forum/discuss.php?d=5487
‘RaySearch Laboratories AB’ 2016, Gurufocus, viewed 5 Jan 2016,
http://www.gurufocus.com/stock/RSLBF
‘RaySearch Laboratories AB 15-year financials ’ 2016, Gurufocus, viewed 11 Jan 2016,
http://www.gurufocus.com/financials/OTCPK:RSLBF#
‘RaySearch Laboratories AB current ratio’ 2016, Gurufocus, viewed 10 Jan 2016,
http://www.gurufocus.com/term/current_ratio/OSTO:RAY%20B/Current%2BRatio/RaySear
ch%2BLaboratories%2BAB
‘Raysearch Laboratories AB: financials’, Investing.com, viewed 11 Jan 2016,
http://au.investing.com/equities/raysearch-laboratories-ratios
‘RaySearch Laboratories AB P/B ratio’ 2016, Gurufocus, viewed 17 Jan 2016,
http://www.gurufocus.com/term/pb/OTCPK:RSLBF/P%252FB%2BRatio/RaySearch%2BLabor
atories%2BAB
‘RaySearch Laboratories AB return on assets’ 2016, Gurufocus, viewed 9 Jan 2016,
http://www.gurufocus.com/term/ROA/OSTO:RAY%20B/Return%2Bon%2BAssets/RaySearch
%2BLaboratories%2BAB
Petty, J, Titman, S, Keown, A, Martin, J, Martin, P, Burrow, M & Nguyen, H 2012, Financial
management: principles and applications, 6th edn, Pearson Australia, NSW.
Pecuniary interest declaration
As a result of my analysis and recommendation, as of 14 January 2016 I hold 532 RaySearch
B shares.
17. 17
Appendices
Appendix 1 EBIT margin / operating margin
Net sales (285217) - Operating expenses (205857) = 79360 / Net sales (285217)
= 27.8%
Appendix 2 Net profit margin
Net sales (285217) - Operating expenses (205857) - financial items (659) = 78701 / Net sales
(285217)
= 27.6%
Appendix 3 Gross profit margin
Gross profit (273590) / net sales (285217)
= 95.9%
Appendix 4 Return on total assets (ROA)
EBIT (Net sales (285217) - Operating expenses (205857)) = 79360 / Total assets (389753)
= 20.4%
Appendix 5 Current ratio
Current assets (212721) / Current liabilities (56385)
= 3.77
Appendix 6 Debt ratio
Total long term liabilities (81820) / total assets (389753)
= 21.0%
18. 18
Appendix 7 Debt-equity ratio
Total debt (17311 + 41096) = 58407 / total equity (251548)
= 23.2%
c.f. US Industry average = 44.0% (‘Industry information’ 2015).
Appendix 8 Quotient value per share
Total share capital (17141000) / total shares* (34282773)
= 0.5 SEK
* Each Class A share carries ten votes and each Class B share carries one vote at the Annual
General Meeting (AGM). Class A shares are not listed on the stock exchange (‘Annual report’
2014, pp. 44-45)
Appendix 9 P/E ratio
Share price (53.0) / earnings per share (1.75)
= 30.3
Appendix 10 Book value
Equity (251548000) / total shares (34282773)
= 7.34
Appendix 11 Price to book (P/B) ratio
Share price at 2014 year end (53.0) / book value (7.34)
= 7.2
Share price 13 Jan 2016 (104.0) / book value (8.36)
= 12.4
19. 19
Appendix 12 Dividend discount model
a) 2010: 5% dividend growth rate
Earnings per share (EPS) = 0.84
Retained earnings (r) = 0.34 (40.5%)
Dividends (D1) = 0.5 (59.5%)
Required rate of return (RE)= 0.1 (10%)
Growth rate(g) = 0.05 (5%)
Ordinary share price = dividend in year 1 (D1)
Required rate of return (RE) – growth rate (g)
= 0.5 / (0.1 – 0.05)
= 10
So, assuming the company had a 5% dividend growth rate and the required rate of return
was 10%, the 2010 stock value would be SEK 10. The market value was SEK 38.
b) 2010: 6.1% dividend growth rate
Earnings per share (EPS) = 0.84
Retained earnings (r) = 0.34 (40.5%)
Dividends (D1) = 0.5 (59.5%)
Required rate of return (RE)= 0.1 (10%)
Return on equity (ROE) = 0.151 (15.1%)
Growth rate (g) = 0.405 (r) * ROE (0.151)
Growth rate(g) = 0.061
Ordinary share price = dividend in year 1 (D1)
Required rate of return (RE) – growth rate (g)
= 0.5 / (0.1 – 0.061)
= 12.8
So, applying the company’s 6.1% dividend growth rate with a required rate of return of 10%,
would value the 2010 stock at SEK 12.8. The market value was SEK 38.
Or, applying the PVDG model:
20. 20
1. The present value of the non-earning stream:
VE,NG = EPS1
RE
= 0.84 / 0.1
= SEK 8.4
2. Value of the future growth opportunities coming from retained earnings:
PVDG = NPV1
RE - g
= NPV1
0.1 – 0.061
= 0.039
NPV1 = r * EPS1 * ROE
RE – r * EPS1
So NPV1 = 0.405 * 0.84 * 0.151
0.1 - 0.405*0.84
Therefore NPV1 = 0.513702 – 0.3402
= 0.173502
So PVDG = SEK 4.45
3. The value of the combined streams:
VE = SEK 8.4 + SEK 4.4
= SEK 12.8
c) 2016 TTM: 12.1% dividend growth rate
Earnings per share (EPS) = 2.26
Retained earnings (r) = 0.915 (40.5%)
Dividends (D1) = 1.345 (59.5%)
Required rate of return (RE)= 0.15 (15%)
Return on equity (ROE) = 0.299 (29.9%)
Growth rate (g) = 0.405 (r) * ROE (0.299)
Growth rate (g) = 0.121
21. 21
Ordinary share price = dividend in year 1 (D1)
Required rate of return (RE) – growth rate (g)
= 1.345 / (0.15 – 0.121)
= 46.3
So, applying the company’s 2010 rate of dividends with a 12.1% dividend growth rate (based
on current ROE) with a required rate of return of 15%, would value the 2016 stock at SEK
46.3. The market value was SEK 104 (13 January 2016)
NB: Valuing the current stock with a 10% required rate of return is not possible due to the
limitation of the models (Petty et al. 2012, p. 343)
Appendix 13 Enhanced dividend discount model
Simplifies to:
Where:
EPS1 = expected annual earnings per share one year in the future at the firm’s normal
growth rate;
p = the normal retention rate;
(1 – p) = the normal dividend payout rate;
pg = the temporary increase in the retention rate (during the growth phase);
r = the required rate of return;
g = the normal growth rate;
gn = the increase in the dividend growth rate, attributable to the increased retention rate
(gn = ROE * pg);
DR = the reduction in the dividend attributable to the increased retention rate (DR = EPS1 *
pg).
22. 22
Assuming:
Dividends (D1) = 1.345 (from appendix 12c)
EPS0 = 3.00
ROE = 0.165
g = 0.05
Accelerated growth rate = 0.20
Accelerated growth period = 3 years
r = 0.10
pg = 0.2 (Normal retention rate (p) = 0.55; accelerated growth period retention rate = 0.75)
Then:
So, applying the company’s 2010 rate of dividends with a 3 year period of 20% accelerated
dividend growth followed by a return to a 5% dividend growth rate with a required rate of
return of 10%, would value the 2016 stock at SEK 41.5, assuming a ROE of 16.5%. The
market value was SEK 104 (13 January 2016)