Interpreting Financial Results Essay

Financial dimensions analysis shows the connections concerning the facets of the participations dealing and delivers to the public the companies situation and performance. Financial ratios could offer signs and indications of the financial situation and warnings of possible problem areas. I was depute the Waste forethought Inc. company they the leading provider of comprehensive waste management services in North America. The subsidiaries provide collection, transfer, recycling, and disposal services.They are also a leading developer, operator and owner of waste-to-energy and landfill gas-to-energy facilities in the United States (SEC.gov, 2013) This paper contains Waste Management Inc. financial reports from the years 2010 through 2013. I use the companys last four years of balance sheet to calculate and compare numerous financial ratios against the companys persistence benchmarks. Waste Management, Inc.s statement is separated by three categories solvency, faculty and profit ability. Due to its complications in the fact that its a service persistence and not sales persistence, whatsoever of the figures are different from a sales company.Solvency ratiosCurrent RatioThe on-going ratio of Waste Management Inc. shows 0.77, 0.80 and 0.83 for years 2011 through 2013.The convening I used is cash & bank balance+ acct. receivable year) / tote up current liabilities of year (Mergentkbr, 2014). It is trending upward but shows that its slight be showtime the industry sample which shows 1.0, 1.0, and 1.0 from 2011, 2012 and 2013. check to our text book, the higher the current ratio the healthier the company becomes. By not meeting the industry standards, this can make investors leave and look for different companies to invest on.Quick ratioThe quick ratio shows that in 2011, 2012, and 2013 resulted in .72, .74 and.77. the formula I used is total current assets of year / total current liabilities of year ( Mergentkbr, 2014) Once again, the trend is on the up cold shoulder and the industry median standard is 1.30, 1.40 and 1.30 in 2011 to 2013 which shows that due to its low memorandum, the numbers did change as much and that a good thing due to the fact that catalogue delays progress.Efficiency RatiosCollection Period (days)According to the data, the collection period during 2011to 2013 are 33.75, 37.43 and 39.40 I used the formula account receivable of year *365/ sales of year (Mergentkbr, 2014), this shows that its trending upward but still outperformed the industry standard which shows 36.30, 39.30, and 41.60 from 2011 to 213. Reason for this collection period growing could be as simple as client size multiplying every year due to population growth. Sales/Inventory (times)According to the data, 2011-2013 sales/ neckcloth shows 42.52, 78.13, and 51.20 from 2011 to 2013. I used the formula sales of year / inventory of year (Mergentkbr, 2014) to calculate for sales and inventory times. As you can see in 2011-2012 there was major spike in the inventory which matches with the industry standards. Industry median standard shows 62.60, 78.40 and 52.20 from 2011 to 2013. In this case Waste Management Inc. is above the industry standard which allows them to have a faster turnaround time and gives flexibility of getting rid of their inventory faster.favourablenessReturn on SalesAccording to the data, return of sales 3.50%, 4.30% and 2.30% from 2011-2013, I used the formula deoxycytidine monophosphate* net profit of year / sales of year (Mergentkbr, 2014). From 2012 to 2013 theres 2% dip in percentage in return on sales, this coincides with Industry median standards which shows the numbers of 3.40%, 3.90% and 2.40%. The company is right on the industry standard in this case.Return on AssetsAccording to the data, return on assets shows 5.10%, 4.20% and 3.67% from2011 to 2013, I used the formula 100*net profit of year / total assets of year (Mergentkbr, 2014). It is on the down swing and its below the industry median stan dard. Industry shows 5.20%, 3.80% and 3.20%.SummaryA financial ratio normally by itself doesnt mean anything unless benchmarked with other companies in the same industry. It shows how well the business measure up against the competition and also can be a tool to measure growth of the business towards eventual(prenominal) company goals. Ratio analysis, when implemented frequently over a period of time, can assist lilliputian companies identify and adjust to trends that affects their procedures.Referenceshttp//www.sec.gov/Archives/edgar/data/823768/000119312512065370/d260235d10k.htm http//www.mergentkbr.com.ezproxy.apollolibrary.com/index.php/reports/industry