Performance Analysis of Potash Corporation of Saskatchewan Inc
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Performance Analysis of Potash Corporation of Saskatchewan Inc
Performance Analysis of Potash Corporation of Saskatchewan Inc
Introduction
The Potash Corporation of Saskatchewan Inc., also referred to as Potash Corp, is a Canadian corporation based in Saskatoon, Saskatchewan. The company is the world's largest potash producer and the third largest producers of nitrogen and phosphate, three primary crop nutrients used to produce fertilizer. At the end of 2012, the company controlled twenty percent of the world's potash production capacity, two percent of nitrogen production capacity and five percent of phosphate supply. The company is part-owner of Canpotex, which manages all potash exporting from Saskatchewan.
It is by far the world's largest producer of potash, producing 20% of the world's supply. It is also the world's largest fertilizer producer, the third largest phosphate producer and the third largest nitrogen produce.
Calculation Of Ratios For Potash Corporation of Saskatchewan Inc
Profitability Ratios
2012
2012
Gross Margin %
=
Gross Profit X 100
=
76,250
=
49.2 %
=
68,380
=
40.7 %
Revenue
155,000
168,000
Net Profit Margin %
=
Net Income X 100
=
31,670
=
20.4 %
=
29,485
=
17.6 %
Revenue
155,000
168,000
ROE % (Net)
=
Net Income X 100
=
31,670
=
29.0 %
=
29,485
=
27 %
Stockholders' Equity
109,200
109,200
ROA % (Net)
=
Net Income X 100
=
31,670
=
20 %
=
29,485
=
18.7 %
Total Assets
158,300
157,350
Liquidity Ratios
2012
2000
Current Ratio
=
Current Assets
=
72,300
=
1.5
=
67,350
=
1.4
Current Liabilities
49,000
48,000
Quick Ratio
=
Quick Assets
=
46,940
=
1.0
=
30,990
=
0.6
Current Liabilities
49,000
48,000
Debt Management
2012
2012
Total Debt to Equity
=
Total Debt & Leases
=
49,100
=
0.45
=
48,150
=
0.44
Shareholders' Equity
109200
109,200
Efficiency Ratios
2012
2012
Receivables Turnover
=
Revenue
=
155,000
=
18.2
=
168,000
=
18.2
Accounts Receivable
8,500
9,250
Inventory Turnover
=
Cost of Goods Sold
=
78,750
=
3.1
=
99,620
=
2.7
Inventory
25360
36360
Analysis of Potash Corporation of Saskatchewan Inc
Profitability Ratios
The financial performance of Potash Corporation of Saskatchewan Inc in terms of profitability is not adequate as the past trends of the SAC that is from 2012 to 2000 indicates that the profits of company is decreased which can verified from the assessment of the profitability ratios that include gross profit margin, net profit margin, return on equity and return on assets. In this context, the gross profit margin of SAC is decreased from 49.2% to 40.7% during the period under consideration, which is not a positive indication for the company; similarly, the net profit margin is also decreased. Furthermore, the return on assets of Potash Corporation of Saskatchewan Inc from 2012 to 2000 is indicating that structure of profitability of the SAC is decreased from 20% to 18.7%; which shows that the ineffective management of company in utilizing its assets to making profits. For that reason, the overall performance of the SAC is not encouraging for the investors.
Liquidity Ratios
The liquidity position of the company is reflected through the current ratio and quick ratio, which indicates that it has declined from 2012 to 2000, which reflects that the liquidity structure of the Potash Corporation of Saskatchewan Inc is not satisfying. The financial performance of the SAC shows that the current ratio is decreased from 1.5 to 1.4 from 2012 to 2000 respectively; however, the decrease in current ratio is not significant, but there will be likely impact of the immediate needs of the company as the current ratio signifies the extent to which current assets cover the current liabilities of Potash Corporation of Saskatchewan Inc. Moreover, the quick ratio is also decreased from 1 to 0.6 over the period under consideration that reflects the sold goods are broadly financed by the creditors (suppliers) (Bull, ...