The Company is ADT Inc.
Quantitative Analysis: For the quantitative analysis, following are some of the questions you should be answering and use the ratios we will learn during the class before the midterm to answer them. But PLEASE DO NOT write the paper in a question answer format, rather use the sample analysis above to format your paper. Be imaginative and creative. Use the ratios under the questions to address the questions and see if the ratios have changed from year to year and if so what does it signify for the company. Merely calculating the ratios is not sufficient , you have to comment on the change in the ratio and the compare it to the competitor company or the industry ratio.
How well is the company doing as an investment?
Earnings per share
Price earrings ratio
How well has management employed the company’s assets?
Return on Assets
Return on Equity
Are profits high enough, given the level of sales?
Gross Profit margin
Net Profit Margin
Operating Expense Margin
How well are the company’s assets being employed to generate sales revenue?
Total assets turnover
Accounts receivable turnover
Inventory Turnover
Are receivables coming in too slowly?
Average Collection period
Is too much cash tied up in inventories?
Inventory turnover ratio
Day in inventory ratio
Does this customer have sufficient cash or other liquid assets to cover its short-term obligations?
Current ratio
Liquid ratio
How quickly does the prospective credit customer pay its bills?
Average Payment period
As a potential or present long-term borrower, is the company’s debt load excessive?
Total Liabilities to Equity
Debt to equity ratio
Are earnings and cash flow sufficient to cover interest payments and provide for some principal repayment?
Times interest earned ratio
Identify three situations in your company that demonstrate strengths or weaknesses in the management of the affairs of the company. Elaborate what kinds of analyses you used in order to identify these strengths or weaknesses and the manner in which they can be addressed or improved (in case of weaknesses) or maintained (in case of strengths) Refer the three case studies provided in the VSBDC article as an example.
Review the cash flow statements of the company and correlate it to the financial statements to identify if the company is in a sound financial position and whether their cash management strategy is adequate.
Perform a trend analysis of the comparative financial statements and identify any significant trends in the company’s growth or any other factor that you may observe as significant. Basically conduct a Horizontal and Vertical analysis
Please cite any sources that you may use to substantiate your analysis.
IMPORTANT WARNING:
