Financial Analysis

[Name of the Institute]

Introduction2

Main data:2

Liquidity Ratio Analysis3

Graphical Representation of Liquidity Ratios4

Profitability Ratios Analysis7

Conclusion8

?9

Financial Analysis

Introduction

In the following paper the financial analysis of Waters Corporation is performed which designs sells, and manufactures its services through the Water division with having high performance liquid chromatography and other technology and support products system. In the following paper I have analyzed the three years i.e.2010, 2011, and 2012. The main data found is in the following table and this paper will be consisting of four ratios that I have to calculate for evaluating the financial performance of the firm, i.e. (profitability ratio, the liquidity ratios, the turnover ratios and the financial ratios.

Discussion

Main Data

 Main data:

2010

2011

2012

current asset

1586641

1942104

2257726

current liability

72932

601863

504242

inventory

204300

212864

229565

cash

308498

383990

481035

equity

1068797

1226578

1467357

debt

1258873

1496656

1700793

EBIT

449932

528600

511490

interest

13924

21971

28073

deprecation

34421

36531

37422

cost of goods sold

653303

730493

737614

Sales

1643371

1851184

1843641

account receivables

358237

367085

404556

total asset

2327670

2723234

3168150

Net income

381763

432968

461443

Financial Ratios Analysis

Liquidity Ratio Analysis

Liquidity Ratios

2010

2011

2012

current ratio

2.18

3.23

4.48

quick ratio

1.90

2.87

4.02

cash ratio

0.42

0.64

0.95

The liquidity ratios indicate how the firm quickly converted into the cash.

The above table shows the way of converter assets into cash:

There is improvement in the current ratio from year 2010 to the year 2012. In the year 2010 it was 2.18 while it increased from 2.18 to 3.23 in the year 2011 and 4.48 in the year 2012.It indicates that firm has enough funds to meet its short term obligations.

There is also improvement in the quick ratio of the firm from year 2010 to the year 2012 from 1.90 to 4.02.

By analysis Balance sheet we can see that cash lift from 0.42 in 2010 to 0.95 in the year 2012.

Graphical Representation of Liquidity Ratios

Financial Leverage Ratios Analysis

The debt ratios are used to measure the firms, financing by using debt and also evaluating whether the firm is in position of paying back its principle amount of debt along with the interest payment.

Debt Ratios

2010

2011

2012

total debt ratio

118%

122%

116%

debt-equity ratio

0.4954664

0.729503546

0.815446411

equity multiplier

2.17784107

2.220188198

2.15908603

times interest earned ratios

32.3134157

24.05898685

18.21999786

cash covered ratio

34.7854783

25.72167858

19.55302248

The firm has more debt in the year 2010 and 2011 while it declined significantly in the year 2012.

High ratio of debt to assets has indicated that the assets of the firm were utilized by using debt but it significantly declined in the year 2012.

The firm is still quite safe to meet its debt obligation as enough funds to meet its short as well as long term obligations as discussed in the liquidity ratios.

Turn Over Ratios

Activity Ratios

 

2010

2011

2012

inventory turnover

 

3.197763093

3.213094331

3.213094331

days sales in inventory

 

114.1422893

20.1

113.5976608

receivables turnover

 

1.27

1.023

4.557196037

days sales in receivables

 

287.4015748

356.57

0.000902224

total asset turnover

 

0.706015458

0.31

0.581929833

As there is increase in the accounts receivables but it indicates it does not take much time to collect its receivables.

There is significant decline in the total asset turnover ratio however it has increased from year 2011 to the year 2012. This ratio indicates the efficient utilize of the assets or generating revenue by utilizing its resources. But the significant increase in the total asset turnover ratios.

From year 2010 to the year 2012 has shown the efficient utilize of the assets for generating its revenue.

Profitability Ratios Analysis

2010

2011

2012

Profitability Margin

0.23230482

0.233887069

0.250288966

Return on Assets

0.16401079

0.158990377

0.145650616

Return on Equity

0.35718944

0.352988558

0.314472211

The profitability ratio indicates and measures the profit generated by each dollar of the sales.

There is significant increase in the profit margin of the firm from year 2010 ...