ratios and analyze
Tuleenhb
edit_on_this_onee_.docxFinancial Management BFIN2302
Ms. Najwa Aldardeer
_
Student Name: Tuleen Basrawi
ID: 1310186
Section: A,B,C,D,E&F
Total: 15 points
Learning Outcomes:
Upon completion of this project, the students should be able to:
A. Explain the environment within which the financial manager operates as well as the role of financial markets and institutions.
B. Evaluate financial performance using financial ratios.
C. Define, quantify, and interpret risk measures.
D. Identify components of working capital and how to manage them.
E. Describe ethical issues of financial management.
The project is following the Bloom’s Taxonomy
· Evaluating : Critiquing, rating , grading, examining, assessing , inferring, drawing conclusion , and forming opinion
· Synthesis: linking new information with previous information
· Analysis: Examining, breaking down
· Application: using knowledge and comprehension; solving problems
· Comprehension: Understanding, paraphrasing, and interpreting
· Knowledge: naming ,recognizing , identifying , recognizing , and reciting
Content
Chapter 1&2------------------------------------------------------------------------------- Section A
Chapter 4-----------------------------------------------------------------------------------Section B
Chapter 8-----------------------------------------------------------------------------------Section C
Chapter 15---------------------------------------------------------------------------------Section D
Select a company from Tadawul.com
Use the following video to help you to find a company in Tadawul .
https://www.youtube.com/watch?v=tirZooaTRhs
Use the university lab to get the full information about a company that listed in Tadawul.
The university lab has access to Thomson Reuter’s database.
Fill up the following
A) Chapter 1 and 2
· Name of the company: Jarir Marketing Co.
· Sector: Consumer Discretionary
· CEO/ Name : Abdulkareem Abdulrahman Nasser Al Akil
· CFO/ Name: Mohamed Abdulkhalik
· Major shareholders: Mohammed Abdulrahman Nasser/ Abdulsalam Abdulrahman Nasser Al Akil /Abdullah Abdulrahman Nasser Al Akil / Nasser Abdulrahman Nasser Al Akil / Abdulkareem Abdulrahman Nasser Al Akil.
|
|
· Definition of Tadawul market:
· Tadawul market: Tadawul, is the sole entity authorized in Kingdom of Saudi Arabia. Mainly it is the Saudi stock exchange Therefore, is it is managed by CML (Capital Market Law). Tadawul is a primary and secondary market, however it is considered secondary. It performs listing, trading in securities, deposit, clearing transferring, settlement, and registry of ownership of securities trading on the Exchange. The CEO of Tadawul is Khalid Abdullah Al Hassan.
· Market data
|
Last trade |
136.50 |
Day’sRange |
135.00 -136.50 |
|
Trade time |
2:15 pm |
52wk Range |
81-141 |
|
Change |
Increase in 7.69% |
Volume |
326,411 |
|
Prev Close |
126.75
|
No of shares outstanding |
90.00 Million |
|
Open |
135.00 |
Authorized capital |
51.08Million |
|
Bid |
136.25 |
P/E(ttm) |
15.46 |
|
Ask |
136.50 |
EPS(ttm) |
N/A |
|
Beta |
0.80 |
Div& Yield |
5.76% |
Source: Tadawul.com,
Customized chart:
3 month graph / show the volume changes and price changes.
Explanation of the Graph:
In January the company stock experienced a period of increase and decrease in demand for their stock and this caused the fluctuation in stock price for the whole of January and the same trend continued until mid-February before the stock experienced a bearish trend leading to the continued drop in stock price. In March the stock experienced a bullish trending caused by an increase in demand for the company stock in relation to supply until it experienced another drop in stock price. The highest stock price that the company achieved was an average of $136.05.
B) Financial ratios
TO WRITE A PROPER ANALYSIS
1- Describe what is happening in the two years (high, low)
2- Write what the ratio tells you
3- Reason why the second year went up or down
*Your grades will be on your analysis
Provide an analysis of 6 financial indicators of the chosen company and compare them with the previous year performance. Conclude your analysis with an overall analysis of the company financial situation.
|
Name |
2015 |
2016 |
analysis |
|
Current ratio |
1.36x |
1.57x |
In the two years current ratio decreased by 0.21, This is an indication that the current liabilities that are covered by expected to be converted into cash in the nearby future have increased hence reducing the liquidity position of the firm.
|
|
Quick ratio |
0.47x
|
0.55x |
In the year 2016 the company was in a better position to meet its short-term liabilities as compared to 2015 where its liquidity decreased. It has 0.47 of liquid assets available to cover each $1 of liability in 2015 as compared to 0.55 liquid assets to cover each $1 of liability in 2016. |
|
Inventory turnover |
6.3x |
6.7x |
This is a measure of the company’s ability to change its product into cash. In 2016 there is a decrease of 0.4 in 2016, which implies a decrease in the ability of the firm to convert its product into cash. |
|
DSO |
8.28x |
11.1x |
There is a decrease in the amount of time our company has to wait to receive payment after sales are made. |
|
Fixed assets turnover |
5.19x |
5.93x |
There is a slight decrease in this ratio which may indicate that the company has invested more on fixed assets in 2016 as compared to 2015 |
|
Total assets turnover |
2.32x |
2.64x |
In the year 2015 the company was using $1 of total assets to generate $2.64 of revenue compared to $1 of total assets to generate $2.32 of revenue in 2016. |
|
Debt ratio |
0.38x |
0.42x |
In 2016 there is a decrease in the amount of leverage used by the company. This shows that the company is less dependent on leverage in 2016 compared to 2015. |
|
Times-interest-earned |
N/A |
N/A |
N/A |
|
Operating margin |
11.4x |
12.7x |
Operating margin is a measurement of what proportion of company’s revenue is left over after paying for variable cost of production. In 2016 there is a decrease in the company’s leftover revenue after paying for variable cost of production. |
|
Profit margin |
13.0x |
12.1x |
This margin shows us how much out of every dollar of sale the company keeps in earnings. There in an increase in earnings kept by the company in 2016 as compared to 2015. |
|
Return on total assets |
N/A |
N/A |
N/A |
|
Basic Earning power |
26.72% |
33.54% |
This ratio measures how effective a company is at using its assets to generate revenue. In 2016 the ratio decreased to 0.27 from 0.34, which implies that our company ability to generate revenue from assets has reduced drastically from 2015. |
|
Return on common equity |
48.7x
|
57.9x |
This ratio indicates the ability of a company to generate profit from shareholders invested capital. In 2016 each common share earned $48.70 while in 2015 each common share earned $57.9 |
|
Price/ Earning |
14.12x |
17.33x |
This is an indication that in 2015, shareholders earned more interest from their common shares as compared to 2016. |
|
Book value per share |
16.99x |
16.71x |
This ratio is used to calculate the value of each share value based on the equity available to common stock shareholders. The value of the stock has slightly improved by $0.28 in 2016 |
|
Market/ Book |
17.1x |
17.6x |
This ratio is used by potential investors who want to invest in an organization. It shows that the price per share has reduced in 2016 when compared to 2015. |
Conclusion of analysis:
In 2015 the company performed better as compared to 2016 but when compared to the industrial ratios the company is performing above average even though they did not perform better compared to the company’s previous financial year. Share value has performed better in 2015 compared to 2016.
Grading Criteria
FOLLOWING THE STRACTURE AND FILLING UP THE REQUIRMENTS
|
Section |
Maximum points |
Points earned |
|
Section one table / Filling more than half of the requirement |
3 |
|
|
Graph along with explanation |
2 |
|
|
Section two/ providing 6 financial ratios and analysis |
6 |
|
|
Overall conclusion of company analysis |
2 |
|
|
Using Thomson Reuter’s database |
1 |
|
|
On time submission and professional presentation |
1 |
|
|
Total |
15 |
|
Comment
Najwa Aldardeer, spring 2016-2017, financial Management/ BFIN2302
