ECONOMICS LAW

Analysis of the Financial summary of WSR

Based on the trend analysis of net sales and net income (see Excel work sheet) the company has been improving .Net sales as well as net income will be rising in all the years as compared to 2014.Continuous increase in net sales indicate good pricing, high product quality or even proper marketing and promotion

Based on profitability analysis (in this case net income represents profitability) it is clear that it will be increasing by each year.This is an indication of proper management and control of cost of sales,operational,selling,general and administrative expenses as well as interest expenses.This shows efficiency and effectiveness by those in management.

Also Return on Assets will be improving each year and this is an indicator that the firms assets are being properly utilized and thus are able to generate more earnings.Every investor would want to invest where the assets are being used efficiently and being misappropriated..

One of the ratios used to show a firms ability to pay debts is the acid test ratio which shows the ability of the firm to meet its short term obligations as and when they fall due using the most liquid assets that is excluding inventory.This ratio will be reducing as the years go by and this is a signal that the firm may in future have problems meeting its short term obligations as and when they will fall due.

Investors get returns through dividends and the more the dividens the better for investors.From the analysis ,dividends will be increasing in the subsequent years from 0.16 in 2014 to 0.30 in 2018.This is a good signal to the investors.

Conclusion

Majority of the ratios indicate that the firm will be doing well and therefore an investor should invest in the stock of WSR .However, investors should keep monitoring the firms liquidity and ability to pay its debts as it has not look good though it is not that bad.