Stephens Company: Ratio Analysis Case
Ratio Analysis Case
Section 1 When comparing Stephens Company with other companies it appears that they are quite similar, but they slightly vary. The first thing that differs from Stephens Company and the others is the return on total assets isn’t the same. The Stephens Companies return on total assets was 18.75% and the other companies were 10.2%. When looking at this ratio it helps one understand whether or not the company is using its assets to generate earnings before paying off other things that need to be paid for. When looking at Stephen company’s cash they do have a little bit more than the other companies. The return on common stockholders equity was 11%. The company has negative financial leverage which means they could …show more content…
earned 3.25 times
Price-earnings ratio 10 Price-earnings ratio 9.5 When comparing the price earnings ratio Stephens Company won’t produce as much as other company’s that compare with Stephens Company. Their ratio is 9.5 and other company’s is slightly more which does mean they won’t produce as much. When looking at the book value per share it is significantly lower than the market value per share. What the book value per share consists of is a measure used by owners of common shares helping individuals determine the level of safety associated with each individual aster al debts are paid off.
Section …show more content…
After analyzing the differences though, it makes lenders start to wonder if they should actually qualify for the loan. The Acid-test ratio and the Gross margin percentage are very similar. One thing that sticks out to me is the current ratio. Stephens Company has a current ratio of 1.87 and the similar companies have a current ratio of 2.1. Both of these ratios are compared to $1. The reason why it concerns me is that Stephens is slightly lower than the others. It concerns me due to the fact it will be harder for them to pay back obligations when they don’t have the assets to do it when the other companies have a slightly higher current ratio. Stephens also has a slightly higher collection period than the others such as 8 days more which could make a big difference in the long run. The other company’s did have an average sale period of 95 days and Stephens had an average sale period of 107 days. They aren’t too far off from one another. I don’t see a reason to not give a loan there. Stephens company has a return on assets of percentage of 18.57% and the industry is at 10.2%. After looking at the return on assets percentage it shows that investors would be a little safer to invest with Stephens than with
Section 1 When comparing Stephens Company with other companies it appears that they are quite similar, but they slightly vary. The first thing that differs from Stephens Company and the others is the return on total assets isn’t the same. The Stephens Companies return on total assets was 18.75% and the other companies were 10.2%. When looking at this ratio it helps one understand whether or not the company is using its assets to generate earnings before paying off other things that need to be paid for. When looking at Stephen company’s cash they do have a little bit more than the other companies. The return on common stockholders equity was 11%. The company has negative financial leverage which means they could …show more content…
earned 3.25 times
Price-earnings ratio 10 Price-earnings ratio 9.5 When comparing the price earnings ratio Stephens Company won’t produce as much as other company’s that compare with Stephens Company. Their ratio is 9.5 and other company’s is slightly more which does mean they won’t produce as much. When looking at the book value per share it is significantly lower than the market value per share. What the book value per share consists of is a measure used by owners of common shares helping individuals determine the level of safety associated with each individual aster al debts are paid off.
Section …show more content…
After analyzing the differences though, it makes lenders start to wonder if they should actually qualify for the loan. The Acid-test ratio and the Gross margin percentage are very similar. One thing that sticks out to me is the current ratio. Stephens Company has a current ratio of 1.87 and the similar companies have a current ratio of 2.1. Both of these ratios are compared to $1. The reason why it concerns me is that Stephens is slightly lower than the others. It concerns me due to the fact it will be harder for them to pay back obligations when they don’t have the assets to do it when the other companies have a slightly higher current ratio. Stephens also has a slightly higher collection period than the others such as 8 days more which could make a big difference in the long run. The other company’s did have an average sale period of 95 days and Stephens had an average sale period of 107 days. They aren’t too far off from one another. I don’t see a reason to not give a loan there. Stephens company has a return on assets of percentage of 18.57% and the industry is at 10.2%. After looking at the return on assets percentage it shows that investors would be a little safer to invest with Stephens than with