Report related to Capsim Simulation

Financial Highlights

Over the past eight years, Erie financial history indicates to us how their financial health has taken place. In brief taking a look into Eries financial history one can observe how it has improved tremendously over the years. There is plenty of information to examine like income information, assets, depreciation, inventory, sales, cash, and more that assist in determining how Erie performed financially. Although, there are other important aspects to observe that will assist in determining how effective Erie has carried out over the years. For instance, this important information would consist of profitability ratios, liquidity ratios, and equity ratios. Taking these ratios and comparing them to close competitors will provide Eries financial aspects.

Profitability ratios are a class of financial metrics that is utilized in assessing an organization's capacity to receive earnings from sales, operations, balance sheet, and at times shareholders equity. Figuring profitability ratios will indicate how efficiently Erie generated it’s profit and value for shareholders. A higher ratio results are generally more favorable, although they provide a great deal of information when it comes to comparing the results to Erie’s closest competitor or the industry. Therefore, having a higher value than competitors is what would be ideal as it would indicate that they are performing at a high level. To get Eries profitability ratios we will look at profit margin, return on assets (ROA), return on equity (ROE), and along with their competitors. From the information below we can conclude that Erie has good profit margin, ROA, and ROE. In all eight years Erie’s biggest competitor is Andrews and comparing profit margin, ROA, and ROE from year eigh may not implement that completely although looking at financials for the past eight years will. From year eight we can see where Erie falls into each category compared to all of their competitors. Erie's profitability ratios are at a good standing and are able to determine that Erie is effective to generate revenue for its shareholders while existing in a competitive market.

Erie
Profit Margin	8%
Return on Assets	8.533%
Return on Equity	13.26%

Competitor - Andrews
Profit Margin	7.4%
Return on Assets	24.98%
Return on Equity	40.46%

Liquidity ratios are used to determine if an organization is able to pay off current debt without causing an increase in capital. Analyzing liquidity ratios will determine whether Erie is able to cover short term responsibilities and cash flow. Not only is one able to tell if Erie is able to pay off obligations, but along it includes various measures for instance current liabilities, liquid assets, short-term debts, working capital, and current ratios. Erie’s current liabilities are indicated by their accounts payable, current debt, and long debt that makes up 81,451. One can take Erie's cash, accounts receivables, and inventory to find their liquid assets. Erie obtains 150,877 in liquid assets that can easily be converted into cash while not losing value. From Erie’s balance sheet one can indicate that they have no existing short-term debts or current debt. To figure Erie’s working capital one can look at their current assets and subtract it by their current liabilities. After calculating current assets and current liabilities one can get Erie’s current ratio and working capital. Erie’s working capital stands at 69,425 and their current ratios stand at 1.8524. Overall, diving into Erie’s liquidity ratio and one can indicate that they are able to cover their debt obligations.

Equity ratios determine the amount of leverage used by an organization. Investigating Erie’s equity ratio is important as if unexpected events were to transpire and Erie were to liquidate, it would assess to determine what their shareholders will receive.