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Running head: LAS VEGAS SANDS

LAS VEGAS SANDS 5

Introduction

The financial analysis provides a lot of insight into the performance of any given company. Various ratios can be used based on the need of an individual. This includes liquidity, leverage, turnover, solvency and valuation ratios. This is usually computed from the values in the statement of financial performance and position. They are calculated using well-outlined formula, and the answer obtained gauged using specific criteria. The ratios not only show the financial health of the company but can also be used for comparative analysis of the various fiscal years in the business. This paper looks at Las Vegas Sands analysis.

Liquidity ratios are used to gauge the ability of the artificial person to honor its short-term financial obligations when they fall due (Saleem & Rehman, 2011). The current ratio is a typical rate that is found in this category. It is obtained by dividing the current assets by the current liabilities. Las Vegas Sands had current assets of 3,207,000 and current liabilities of 2,948,000 in the year 2017. This translates into a current ratio of 1.09. This was a slight decrease from the 1.10 posted in 2016 and 1.46 published in 2015. This can be attributed to the fact that the current liabilities are increasing at a considerably higher rate. However, the ratio has a value of greater than one showing that the company is liquid.

Turnover ratios are used to measure the efficiency with which the management is utilizing the company assets. Various ratios fall into this category including the account receivable ratio. The firm had sales amounting to 12,282,000 and the debtors totaling to 615,000. This yields a turnover of 20.94. This is an increase from the 14.70 in 2016 and 9.22 in 2015. The day's sales are in account receivable has steadily decreased from one financial year to the other. This is shown by the 39.27 in 2015, 24.55 in 2016 and 17.18 in 2017. This indicates that the management has been doing a great job in managing the account receivables. This can be attributed to the discount rates and other terms offered to the debtors.

Besides, the inventory turnover is obtained by dividing the cost of goods sold with the average inventory. The firm had a COGS of 6,485,000 and an inventory of 47,000. This gives a turnover of 137.98 in 2017. This is an increase from the 126.89 in the previous year. The day sales in stock are 2.61 in 2017, 2.84 in 2016 and 2.55 in 2015. This is excellent performance as it shows the firm is replenishing its stock. The days of sales in inventory shows that the business sells the stock in only two days. This implies that the company incurs lower storage and holding costs. Furthermore, the total assets turnover is obtained by dividing the sales by the average total assets. In the year 2017 the business had a sales revenue of 12,882,000 and total assets of 20,687,000. This yields a turnover of 0.62. This is a slight decrease from the 0.56 in 2016 and 2015. The ratios are below a value of one indicating that the managers are not doing a great job at utilizing the total assets. There is need to change the policies and strategies to increase it to a value that is greater than one.

The leverage ratios measure the number of debts in any organization. Various ratios can be used to achieve this including the debt ratio, debt to equity ratio and the times' interest earned. The company had a debt of 9,792,000 and equity of 6,493,000 in the year 2017. This yields a ratio of 1.51. This was a decrease from 1.62 registered in the previous year. The firm had total assets amounting to 20,687,000 in 2017 this yields a debt ratio of 0.47 in 2017. This is a slight decrease from the 0.49 registered in the previous year. The times interest earned is obtained dividing the earnings before interest and tax with the interest expense. The company had a ratio of 9.33 in the year 2017 a slight increase from the 8.23 registered in the year 2016. This shows that the business is in a better position to pay its debts.

Profitability ratios are used to gauge the performance of the business whether it is generating profits or losses. There are various ratios in this category in this category such as the gross profit margin, the earnings per share and the return on equity (ROE) (Gitman, Juchau & Flanagan, 2015). The gross profit margin is obtained by dividing the gross profit by the amount of revenue. This yields a ratio of 49.66% in 2017, 48.84% in 2016 and 47.66% in 2015. The EPS has also moved in the same pattern as noted by $2.47 in 2015, $2.10 in 2016 and $3.53 in 2017. The ROE obtained by dividing the net income by the equity was 28.84% in 2015, 27.04% in 2016 and 43.22% in 2017. These ratios show that the company has been increasing its revenues from one fiscal year to the other.

Conclusion

Las Vegas Sands is a company that has excellent financial health. The firm is liquid as shown by the liquidity ratios that are above the value of one. The debt levels have also been kept within sustainable levels in the period under review. Apart from the total asset turnover, the inventory and the account receivable have been managed well as indicated by the ratios. Besides, the profitability ratios mean a firm that has been increasing its profits from one fiscal year to the other.

Reference

Gitman, L. J., Juchau, R., & Flanagan, J. (2015). Principles of managerial finance. Pearson Higher Education AU.

Saleem, Q., & Rehman, R. U. (2011). Impacts of liquidity ratios on profitability. Interdisciplinary Journal of Research in Business, 1(7), 95-98.

https://investor.sands.com/financial-reports/latest-financial-reports/default.aspx