Analyzing Financial Statements - publié le 30/08/2010

Résumé du document

The company's liquidity is not good at all. In fact the quick ratio should be at least 1 to be considered for investors as a company without risks. However with the help of the percentages calculated between years 2006 to 2007, and years 2007 to 2008 we have a better idea of the evolution from these figures. We obtain here that during the three years, current ratio and quick ratio have both increased year after year. The evolution between 2006 and 2008 for the current ratio is by example of + 16,33% and the evolution between the same years for the quick ratio is of + 54,33%. It is the illustration that the financial situation of the company concerning the liquidity is increasing year after year.

Extraits

[...] The figures are decreasing for many companies: the biggest like the smallest. It is why I think that the study of the statements from Safeway is really good and it is given us the feeling that all is stable and the crisis is really good managed. By the way, if I would not knowing that there is an economic crisis I could not guess it with the study of these figures, which is badly not the case for many companies. [...]

[...] In 2006 for each $ that the company has paid, she had $ 0.76 to pay it. The quick ratio means that: In 2008 for each $ that the company has paid, she had $ 0.31 to pay it with easily convertible assets. In 2007 for each $ that the company has paid, she had $ 0.24 to pay it with easily convertible assets. In 2006 for each $ that the company has paid, she had $ 0.20 to pay it with easily convertible assets. [...]

[...] It shows how many times we have to pay the earnings per share to obtain a share. The Market-to-Book ratio means the comparison between the real price of the common stock, which appears in the balance sheet of a company, and the price, which his represented by the number of share multiplied by the year- end common stock price. It permits to show the market's opinion of the company. Comments What we can remark first, is that the P/E is decreasing year after year. [...]

[...] Calculations “Calculate the total dividends paid over the last year. To answer this you will need to go to a financial site, such as www.finance.yahoo.com to determine the amount of dividend per share.” To be able to calculate the total dividends paid last year, in 2008, we have to apply this formula: Total dividends paid = (value of dividend paid per share) * (Year-end shares outstanding) On the website of yahoo we have learned that the value of dividend paid per share was on: We have then to calculate: Total dividends paid = 0.318 *429,000 = $ 136,422 The total dividends paid in 2008 were of $ 136,422. [...]

[...] It means that by example in 2008, Safeway has really won $ 2.04 for $ 100 that she has obtained with its sales. It is not a very huge profit but it is a positive figure and superior as which means that the company makes profit and that is important. The relative low figure can be explained by the sector, which has not a really high profit margin but has a profitable business because the volume of the sales is really high. It is then the particularity of this sector to have big volume of sales with a low profit margin. [...]