Financial Analysis: Financial Figures and Concepts
Financial statements are very important in accessing company propagation in terms of sustainability. It always gives the market position of a company, thus ensuring that the Company formulates some strategies to meets its long terms and short terms goals. In addition, it is a very crucial document that provides ideas to the investors on whether to invest in the Company or not. This paper will provide a financial ratio computation of Apix Printing Corporation. Apix is a printing company that is excelling in the printing industry in the current world as it possesses a large market share. Other companies that are the competitors of Apix in the same industry include Multicolor Corporation (MCC) and Quad/Graphics Inc. (QG) (Lan, 2012, September). A comparative analysis of the three companies will be relevant to project the performance of Apix with other companies, thus measuring its ability to attract investors than their counterparts. The financial ratio computation is in terms of current ratio, (long-term) debt to equity ratio, gross margin percentage, net profit margin percentage, and return on equity percentage.
Current ratio
The current ratio is a liquidity ratio that determines whether a company is able to meet its short terms obligations using the available resources of the Company. It is always calculated by comparing the current assets if the Company and the current liabilities, whereby the current assets are divided by the current liabilities. In this case, the current ratio of Apix, MCC and QG companies between 2012 and 2013 is as follows;
| 2013 | APIX | MCC | QG |
| Current Asset | 20450M | 190,544M | 1.07B |
| Current Liabilities | 18100M | 122,437M | 888.8M |
| Ratios | 1.13 | 1.56 | 1.20 |
| 2012 | APIX | MCC | QG |
| Current Asset | 14,500M | 167,102M | 990.0M |
| Current Liabilities | 11,200M | 132,233M | 752.8M |
| Ratios | 1.29 | 1.26 | 1.32 |
It is vital to note that the higher the ratio, the more liquid the Company becomes. Therefore according to the table, the current ratio of 2013 indicates that MCC had the best ratio. However, all three companies will be able to meet its obligations since the ratios are above 1. The analysis from the table indicates that Apix and QG current ratios depreciated significantly, thus making it become less liquidity (Quad/Graphics Inc. 2013). This indicates that they are spending more than the way they are generating cash. MCC is spending less than the way they are generating cash.
Debt to equity ratio (D/E)
D/E is a financial ratio that indicates the proportion of the shareholders’ equity to the debt that was used to finance the Company. The formula is always given by the total liabilities of the Company divided by the total stockholders’ equity of the Company. The D/E of Apix, MCC, and QG is indicated calculated as follows;
| The year 2012 & 2013 | APIX | MCC | QG |
| Total liabilities | 111200 M | 555634M | 2863.2 M |
| Total stockholder equity | 63300 M | 253020M | 1235.7 M |
| Ratios | 1.76 | 2.20 | 2.32 |
| Total liabilities | 73050 M | 564526 M | 2.88B |
| Total stockholder equity | 84550 M | 275024M | 1.29B |
| Ratios | 0.86 | 2.05 | 2.23 |
It is vital to note that a high D/E ratio shows that there are more creditors used than the financing by the shareholders (Lan, 2012, September). Therefore in this scenario from the table, both the MCC and QD have a greater investment risk than Apix. Apix has a decreasing D/E trend between 2012 and 2013.
Gross Margin Percentage
This is the gross profit of the Company, which measures the profitability of a company that sells its merchandise. It is always calculated by dividing the profit of the Company by the sales of the Company. The table below shows the computation of gross margin for Apix, MCC, and QD.
| 2012&2013
|
APEX | MCC | Quad |
| Revenue | 475 m | 659815m | 4094 b |
| COGS
|
(374.5 m) | 533464 m | 3183.5 b |
| Gross Profit | 100.5 m | 126351 m | 910.5 b |
| Revenue | 450 m | 510247m | 4.8b |
| COGS
|
(324.3m) | 411963m | 4.13 b |
| Gross Profit | 12.57m | 98284 m | 670 m |
| 2012 & 2013 | APIX | MCC | Quad |
| Gross Profit | 100.5m | 126351 m | 910.5 b |
| Net Sales | 475m | 659815 m | 4094 B |
| % | 0.21 | 0.19 | 0.22 |
| Gross Profit | 125.7 m | 98284 m | 670 m
|
| Net Sales | 450 m | 510247 m | 4.8 b |
| % | 0.28 | 0.19 | 0.14 |
It is vital to note that high ratios indicate a positive deviation; thus, the Company is able to sell its inventory or merchandise at a higher profit percentage. The table indicates that Apix ratios increased gradually between 2012 and 2013. Therefore Apix remains consistent in its progression as the highest among its competitors. MCC and QD profitability has decreased gradually, thus indicating no improvement at all.
Net profit margin percentage
This always indicates the percentage of the remaining revenue after all the company expenses have been deducted from the total revenue made by the Company. It is calculated by dividing the net income of the
by the total revenue accumulated by the Company. The table below shows the net profit margin of Apix, MCC, and QD.
| Company | Year | Net income | Revenue | Ratio |
| APIX | 2012 | 6500m | 475m | 13.7 |
| 2013 | 26250m
|
450m | 58.3 | |
| MCC | 2012 | 19668m | 510247m | 0.05 |
| 2013 | 30300 | 659815m | 0.04 | |
| Quad | 2012 | 87.1m | 4094m | 0.02 |
| 2013 | 31.4m | 4.8b | 0.01 |
From the computation above, it is clear that Apix ratio increased imminently over the year, with the Company receiving a significant net income in 2013. Comparing to MCC and QD, Apix has a high-profit margin indicating that they have full control in offering its products and services as well as its cost (Lan, 2012, September). This improvement s always a result of strategies that fosters effective management, strong pricing strategies, and keeping low expenses.
Return on equity percentage (ROE)
This is a profitability ratio that measures the Company’s ability to generate profits for the investments of the shareholders of the Company. It is always computed by dividing the net income by the stockholders’ equity. Creditors and investors always consider high ratios to engage the Company in any financial need. The table below shows the ROE for Apix, MCC, and QD.
| Company | Year | Net income | TSE | Ratio |
| APIX | 2012 | 6500m | 63300 | 0.10 |
| (CTU,2018) | 2013 | 26250m
|
84550 | 0.31 |
| MCC | 2012 | 19668m | 25320 | 0.78 |
| Annual Report. (n.d.). | 2013 | 30300 | 275024m | 0.11 |
| Quad | 2012 | 87.1m | 1235.7 | 0.07 |
| Quad/Graphics Inc. (n.d.). | 2013 | 31.4m | 1.29b | 0.02 |
From the analysis above, Apix ratio displays increments over the annual period. In comparison with the other companies, QD Ratios declined over the period; thus, it was impossible for the Company to maintain its consistency (Lan, 2012, September). On the other side, MCC also decreased but less than that of QD. QD indicates that investment would only return $0.20c to the dollar. Apex is returning 31% of the dollar, while QD is returning 11% of the dollar. Therefore Apex indicates a marvelous investment option than the other companies.
In general, Apex displays a good financial record, which makes it exemplary for investment options for investors. This is very clear from the financial analysis ration computed above as compared to the competitors of the Company. In addition, Apix shows some consistency in their financial ratios, thus indicating that it is safe for investors. Investors need to consider Apix as their option for investors.
References
Lan, J. (2012, September). 16 Financial Ratios for Analyzing a Company’s Strengths and
Weaknesses. Retrieved July 18, 2018, from http://www.aaii.com/journal/article/16-financial-ratios-for-analyzing-a-companys-strengths-and-weaknesses.touch
Saleem, Q., & Rehman, R. U. (2011). Impacts of liquidity ratios on profitability. Interdisciplinary journal of research in business, 1(7), 95-98.
Bayrakdaroglu, A., Mirgen, C., & Kuyu, E. (2017). Relationship between profitability ratios and stock prices: an empirical analysis on BIST-100. PressAcademia Procedia, 6(1), 1-10.