Interpreting Financial Results Essay

Financial dimensions analysis shows the connections concerning the facets of the confederacys dealings and delivers to the state-supported the companies situation and performance. Financial symmetrys could offer signs and indications of the monetary situation and warnings of possible hassle atomic number 18as. I was assigned the Waste Management Inc. company they the leading fork outr of comprehensive waste management services in North America. The subsidiaries provide aggregation, transfer, recycling, and disposal services.They are besides a leading developer, operator and owner of waste-to-energy and landfill gas-to-energy facilities in the United States (SEC.gov, 2013) This paper contains Waste Management Inc. monetary reports from the days 2010 through 2013. I use the companys last iv course of instructions of balance sheet to calculate and compare numerous financial ratios against the companys industry benchmarks. Waste Management, Inc.s statement is garbled by t hree categories solvency, efficiency and shekelsability. Due to its complications in the fact that its a service industry and not sales industry, some of the figures are different from a sales company.Solvency ratiosCurrent RatioThe legitimate ratio of Waste Management Inc. shows 0.77, 0.80 and 0.83 for familys 2011 through 2013.The principle I used is cash & bank balance+ acct. due year) / total current liabilities of year (Mergentkbr, 2014). It is trending upward but shows that its slight below the industry bill which shows 1.0, 1.0, and 1.0 from 2011, 2012 and 2013. According to our text book, the higher the current ratio the healthier the company becomes. By not meeting the industry standards, this can make investors forget and look for different companies to invest on.Quick ratioThe quick ratio shows that in 2011, 2012, and 2013 resulted in .72, .74 and.77. the formula I used is total current assets of year / total current liabilities of year ( Mergentkbr, 2014) Once ag ain, the trend is on the upswing and the industry median standard is 1.30, 1.40 and 1.30 in 2011 to 2013 which shows that due to its low caudex, the numbers did change as much and that a good thing due to the fact that inventory delays progress.Efficiency RatiosCollection Period (days)According to the data, the collection period during 2011to 2013 are 33.75, 37.43 and 39.40 I used the formula account receivable of year *365/ sales of year (Mergentkbr, 2014), this shows that its trending upward but mollify outperformed the industry standard which shows 36.30, 39.30, and 41.60 from 2011 to 213. Reason for this collection period growing could be as simple as customer size multiplying every year due to population growth. Sales/Inventory ( measures)According to the data, 2011-2013 sales/inventory shows 42.52, 78.13, and 51.20 from 2011 to 2013. I used the formula sales of year / inventory of year (Mergentkbr, 2014) to calculate for sales and inventory times. As you can see in 2011-20 12 at that place was major spike in the inventory which matches with the industry standards. exertion median standard shows 62.60, 78.40 and 52.20 from 2011 to 2013. In this case Waste Management Inc. is preceding(prenominal) the industry standard which allows them to have a faster turnaround time and gives flexibility of getting rid of their inventory faster.ProfitabilityReturn on SalesAccording to the data, outlet of sales 3.50%, 4.30% and 2.30% from 2011-2013, I used the formula 100* net profit of year / sales of year (Mergentkbr, 2014). From 2012 to 2013 theres 2% dip in percentage in present on sales, this coincides with Industry median standards which shows the numbers of 3.40%, 3.90% and 2.40%. The company is right on the industry standard in this case.Return on AssetsAccording to the data, return on assets shows 5.10%, 4.20% and 3.67% from2011 to 2013, I used the formula 100*net profit of year / total assets of year (Mergentkbr, 2014). It is on the down swing and its be low the industry median standard. Industry shows 5.20%, 3.80% and 3.20%.SummaryA financial ratio normally by itself doesnt mean anything unless benchmarked with other companies in the same industry. It shows how well the note measure up against the competition and also can be a tool to measure growth of the business towards eventual company goals. Ratio analysis, when implemented frequently over a period of time, can assist small companies identify and adjust to trends that affects their procedures.Referenceshttp//www.sec.gov/ narrative/edgar/data/823768/000119312512065370/d260235d10k.htm http//www.mergentkbr.com.ezproxy.apollolibrary.com/index.php/reports/industry