FINANCIAL ANALYSIS

Financial Analysis

Financial Analysis

Company Overview

ModusLink Global Solutions (ModusLink) is engaged in providing global supply chain management services and solutions. The company offers supply chain management services to technology-based clients in areas like storage, software, computing, consumer electronics, and storage and communications markets. The company operates in the Americas, Asia and Europe. It is headquartered in Waltham, Massachusetts and employs around 4,400 people.

The company recorded revenues of $924 million in the fiscal year ended July 2010, a decrease of 8.4% compared to 2009. The company's operating loss was $6.9 million in FY2010, as compared to an operating loss of $167.7 million in FY2009. Its net loss was $17.8 million in FY2010, as compared to the net loss of $193.5 million in FY2009.

Ratio Analysis

ModusLink Global Solutions, Inc. (NMS)

Profitability Ratios

07/31/2010

07/31/2009

07/31/2008

07/31/2007

07/31/2006

ROA % (Net)

(3.29)

(28.32)

1.12

6.25

2.01

ROE % (Net)

(5.36)

(43.4)

1.65

9.38

3.08

ROI % (Operating)

(2.08)

(37.59)

0.07

2.67

0.11

EBITDA Margin %

1.66

(14.02)

3.49

5.81

3.91

Calculated Tax Rate %

EBT<0

EBT<0

45.1

13.08

11.63

Revenue per Employee

209,999

245,989

226,657

357,196

308,095

 

Liquidity Ratios

07/31/2010

07/31/2009

07/31/2008

07/31/2007

07/31/2006

Quick Ratio

1.72

1.85

1.6

2.12

1.89

Current Ratio

2.19

2.25

2.02

2.45

2.32

Net Current Assets % TA

42.34

42.64

29.45

39.09

36.98

 

Debt Management

07/31/2010

07/31/2009

07/31/2008

07/31/2007

07/31/2006

LT Debt to Equity

0

0

0

0.05

0.05

Total Debt to Equity

0

0

0

0.05

0.05

 

Asset Management

07/31/2010

07/31/2009

07/31/2008

07/31/2007

07/31/2006

Total Asset Turnover

1.71

1.48

1.31

1.44

1.55

Receivables Turnover

5.59

5.25

5.34

6.33

6.74

Inventory Turnover

11.78

11.9

12.68

14.58

13.16

Accounts Payable Turnover

7.27

6.95

6.67

7.56

8.01

Accrued Expenses Turnover

17.18

16.91

17.25

19.42

20.41

Property Plant & Equip Turnover

16.2

14.82

16.39

22.61

25.85

Cash & Equivalents Turnover

5.6

6.12

6.46

7.59

7.09

 

Per Share

07/31/2010

07/31/2009

07/31/2008

07/31/2007

07/31/2006

Cash Flow per Share

0.93

0.79

(0.12)

1.09

0.34

Book Value per Share

7.29

7.67

11.21

11.43

10.29

The ratio analysis involves comparisons; different ratios of the company are calculated with the given data of the company from (financial statements and balance sheets). The ratio analysis provides in-depth and timely information to the management for critical strategic decision making. Different ratios are calculated in the ratio analysis which provides different aspects of the company's performance (Belverd, 2007).

Overall Ratio analysis of this company shows that company is performing well but it should seriously work to improve its return on equity and return on assets, as they both shows a negative figure, overall looking at their liquidity ratio it shows a strong position company can easily set off its current obligations against its assets, in short one can expect that company will start earning better return in future because of its strong financial position (Charles, 2006).

Trend Analysis

The trend analysis is a commonly used statistical method, commonly used by the financial managers to analyze and determine the performance of the company with reference to different bases such as the previous year, and or any particular figures like sales, production cost and operational cost. It is used to determine the equation that best fits the data in a scatter plot and aids management for decision making purpose. (Mark, 2009)

Trend analysis has several values:

It identifies the optimal operating conditions

The qualitative understanding and interpretation of the relationships of the variables.

Forecasting.

Trend analysis is commonly used by management to determine the optimal condition for operations with the help of an equation that establishes a relationship between independent and dependent variables (Copeland, 1988). The equation of the trend line provides an understandable measure of the variation and change resulted in the output by changing independent variable (input). The use of the principle provides the forecasted effects of change in the process. Trend analysis is a natural outgrowth of process analysis and the other product and process control tool. Much of the work required for trend analysis is already accomplished during process ...