Preview

Blue Nile

Good Essays
Open Document
Open Document
348 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Blue Nile
The spreadsheet I did presents a summary of Blue Nile financial results from 2005 to 2009. From 2005 to 2007 revenues and net income both increased. The deep recession which began in late 2007 seriously affected the revenue in 2008. And then in 2009 the revenue recovered and increased slightly.
I am going to analysis the financial performance in three parts.
First, profitability ratios. Blue Nile had steady return on asset ratios around .1. The company utilized its assets very efficiently and outperformed their competitors. By doing research on Yahoo Finance, we know the industry return on equity is 0.18. Blue Nile’s return on equity ratio was much higher. It created better return to investors. Net profit margins were mostly lower than the industry average level. For example in 2009, Blue Nile only had net income of 4 cents for each dollar sale. Its low margins can be explained by its low pricing of products. As Rita said, Blue Nile had a much lower markup than Tiffany.
Blue Nile’s number for liquidity ratios are impressive. Such high ratios from 2005 through 2009 show the company’s great ability to pay short-term debt. One of the company’s strategies is that suppliers finance Blue Nile’s sales growth. (具体讲) The business model contributed to higher sales volumes with minimal additional capital investment.
With respect to leverage ratios, Blue Nile had really low long-term debt to equity ratios compared to the industry. Tiffany’s long-term debt to equity was as high as .39. Because Blue Nile offered a balance between the debt to equity range and firm’s cost of capital, its capital structure was optimal. The company had low capital investment financed by creditors and bondholders. Its debt to assets ratios are over .5, which means it, had a lot of debt obligations. However, most of the company’s debt was current and it was able to pay off creditors in a timely manner. Creditors did not need to worry about getting paid.
Blue Nile’s strong financial

You May Also Find These Documents Helpful

  • Satisfactory Essays

    This memo includes a brief quantitative analysis of Gopher Manufacturing. After reviewing the company’s financial statements, the company has a healthy current ratio of 2, meaning that its short-term assets are readily available to pay off its short-term liabilities. Although its current ratio is a healthy 2, it should be noted that the company is retain about 13 percent of its current assets in the form of inventory and after computing its DIO, it is obvious that it takes the company about 240 days to be converted to sales, either as cash or accounts receivables. Moreover, Gopher Manufacturing Company’s Direct Sales Outstanding shows that it takes the company about 379 days to collect on Sales that go to Accounts Receivable. This is very high number and shows that even the current ratio is 2, the company is not certainly liquid because it takes it a long amount of time to collect its receivables.…

    • 289 Words
    • 1 Page
    Satisfactory Essays
  • Satisfactory Essays

    Beacon lumber analysis

    • 269 Words
    • 2 Pages

    The debt-to-equity ratio measure a company's financial leverage, suggesting the proportion of equity and debt the company used to finance its asset. The debt-to-equity ratios of Beacon Lumber Company from November 2009 to January 2010 are 1.181047492, 1.230387896 and 1.14884363. These three ratios are all above1.0 showing that the majority of assets are financed through debt, which means the company strategy is aggressively generating more earnings. At the same time, Beacon Lumber Company should carefully handle this aggressive strategy and protect stockholder’s right.…

    • 269 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Cologne Haefren Baum Case

    • 924 Words
    • 4 Pages

    Although the sales of the company have declined significantly their cost of goods sold has remained high, especially between 1994 and 1995 the company had a decline in sales and an increase in cost of goods sold. This is evidence the company is having problems passing costs to its consumers. The company is not very asset intensive and its decrease in total asset turnover can be due to their decrease in sales, however their rather low total asset turnover which is also decreasing from 2.1 to 1.5 shows their assets are not being used very efficiently. As a result of their sales decrease their Fixed Asset turnover also decreased from 7.0 to 5.4. The decrease in sales and increase in competition also means more shelf time for their inventory which has increased from 103 to 129, which makes Haefren Baum’s price cutting strategy questionable. The company is already experiencing a loss of revenue due to their lower prices; however this is not stimulating the number of different sales because the inventory is sitting in the…

    • 924 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Boeing Financial Analysis

    • 9354 Words
    • 38 Pages

    The Boeing Corporation, originally Pacific Aero Products Company, was established in 1916 in the Washington Puget Sound region. The company was originally incorporated to build aircraft, air mail delivery, and pilot training, but was broken up by the government in 1934 creating United Airlines and Boeing Aircraft Company. During the first 97 years the company expanded through strategic mergers and acquisitions of storied aerospace pioneering companies into the $81.7 billion dollar company it is today. Many of the companies are household names with the older generations: North American Aviation, McDonnell Douglas, Rockwell International, Hughes Space & Communications, and Jeppesen. Through these expansions, Boeing has become the world’s largest and most diversified player in the aerospace and defense industry. Ranked in the top of U.S. exporters, Boeing supports airlines as well as the U.S. and allied government customers in 150 countries. The company is divided into two major business units supported by nine corporate functions. The two business units are Commercial Airplanes (60%) and Defense, Space & Security.…

    • 9354 Words
    • 38 Pages
    Powerful Essays
  • Good Essays

    This ratio measures a company’s ability to pay off its debts. In addition, it also shows how many assets a business has comparing to its liabilities. The…

    • 1432 Words
    • 6 Pages
    Good Essays
  • Better Essays

    Throughout history, the business community doesn’t necessarily think of a chemical, wholesale distributor, as having the ability to reach double-digit growth rates, all while revolutionizing the distribution process. But that is exactly what Cape Chemical has done. By offering “next day delivery,” the company was able to differentiate itself from its competitors and gain a significantly larger market share than those same adversaries. But with the new increase in demand, a lack of borrowing power, a very “loose” accounts payable collection system and a growing inventory pool, Cape Chemical ran into cash flow issues. Since they are running into cash flow issues now, even with double-digit growth rates year over year, we can only assume that the company will have a even larger financial burden when those same normal, growth rates slow. I have outlined three scenarios, all of which will benefit Cape Chemical almost immediately, and most importantly, benefit and lower their financial stress in the long run. I also have left an open mind about the possibility of a combination of scenarios as being Cape Chemical’s best option going forward. The three scenarios are all relatively simple fixes, and are as follows: tighten the schedule of when customers pay their bills, keep lower inventory levels and lastly, lower, both, fixed and variable costs that the company may endure throughout the year.…

    • 1105 Words
    • 3 Pages
    Better Essays
  • Powerful Essays

    Jb Hi-Fi Financial Analysis

    • 2749 Words
    • 11 Pages

    The impact of a company’s financial statement depends mainly on the company’s business strategy; both transactional and operational, its industry profile and the nature of its competitive environment. This report analyses 15 ratios of JB Hi-Fi’s financial performance and suggests a recommendation for investors.…

    • 2749 Words
    • 11 Pages
    Powerful Essays
  • Good Essays

    FIN 571 Southwest Financial

    • 1174 Words
    • 10 Pages

    The term “financial leverage refers to the use of debt in a firm's capital structure” (Parrino, Kidwell, & Bates, 2012, pg. 5). The purpose of leverage ratios is to measure the ability for a company to meet its long term financial debts and identify the extent of using debt over equity. In other words, leverage ratios indicate the level of debt and ability to pay off these debts. This information is critical for managers, shareholders, and creditors since they want to assess the organizations debt situation. By analyzing Southwest’s leverage ratio, one can identify their financial situations pertaining to debts.…

    • 1174 Words
    • 10 Pages
    Good Essays
  • Satisfactory Essays

    The options we chose led to a 44% drop in working capital requirement, drop from 159 days to 128 days in the cash conversion cycle and a 87% drop in debt. Overall we met our expectations of reducing working capital requirement and freeing up additional capital. EBIT has dropped immediately but by 2015 net income was higher by $8,000 despite the drop in $255,000 drop in EBIT in 2013. This surprised the team as we did not expect that in the long run by improving the working capital requirements of the company we reduced costs and increase net income resulting to a total created value of $691,000 for the firm. Despite the immediate decrease in sales in 2013, the overall financial position of the company is better in the long run, and moreover we have a remaining credit limit of approximately $2.8 million which is almost equal to the initial amount of credit borrowed in 2012.…

    • 861 Words
    • 4 Pages
    Satisfactory Essays
  • Powerful Essays

    In assessing an organization’s financial health, one of the most important measures that investors look at is liquidity. Since it indicates the organization’s ability to ward off short-term threats, it is especially important for an organization to maintain a certain level of liquidity that will assure its survival, in case the need arises.…

    • 1753 Words
    • 8 Pages
    Powerful Essays
  • Good Essays

    Clarkson Lumber

    • 880 Words
    • 10 Pages

    In order to examine operational performance of Clarkson Lumber Company, we calculated financial ratios for years 1993 to 1996 first quarter. In addition, to make a meaningful comparison, we calculated financial ratio for industry. Industry averages were calculated by taking arithmetic average of high-profit and low-profit outlets, then we calculated ratios. Financial ratios of Clarkson Lumber and industry averages can be seen in Exhibit 1. First of all, regarding current ratio, it has sharply declining trend, especially after year 1993, current ratios are below industry average. Even in 1995, current ratio is far below than the low-profit outlet’s current ratio. The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets. When we focus on quick ratios of Clarkson, we also see declining trend in quick ratio, which shows that Clarkson is having harder and harder times to meet its current liabilities by using current assets. Overall, liquidity position of company seems to be weak. As for asset management ratios, first ratio to be discussed is inventory turnover ratio. Inventory turnover ratio measures how many times average inventory is "turned" or sold during a period. We noticed that after year 1993, inventory turnover ratio is below industry and is has also declining trend. DSO shows average number of day after making a sale before receiving cash. When we compare it to industry average (48 days), one may notice that Clarkson is doing (49 days) near to industry. As for FA Turnover and TA Turnover ratios, Clarkson have ratios above industry. Yet, these ratios are decreasing through years which may be a threat for future of the…

    • 880 Words
    • 10 Pages
    Good Essays
  • Best Essays

    Business Finance

    • 2037 Words
    • 9 Pages

    The objective of the report is to analyze Samsung Electronics Co., Ltd in relation to the last three years financial summary, with the aim of predicting future development of Samsung Electronics based on its past performance as well as providing some suggestions to clients about investment.…

    • 2037 Words
    • 9 Pages
    Best Essays
  • Good Essays

    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.…

    • 734 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    Kelly Services Case Study

    • 523 Words
    • 3 Pages

    For the cases of Olsten and Volt, you can see that Olsten has no debt. Having no debt means the returns you are going to receive are going to be a lot lower For instance Olsten has 0 debt financing and as you can see there returns are the lowest of the three companies. On the other hand Kelly also has 0 debt but there forecasting for growth is a lot lower then Volt the reason being because they do not have the financing to take on investments that can grow their company in the future. On the other hand when you look into Volt’s statements they have the highest debt with still good net worth, but it has the highest level of growth for future advancement. So what this shows is a company that has the highest leverage won’t only have a good return on investment it will also show a favorable path for growth within the future. Another interesting thing to look at is the return on sales. Even though Volt put up a negative figure for one of it’s terms for sales it still had a relatively high net worth. This can mainly be attributed to the way they leveraged their by taking on debt.…

    • 523 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    Nile River

    • 625 Words
    • 3 Pages

    The Nile River is made up of two tributaries. The two tributaries are the White Nile, and the Blue Nile. These two rivers connect together in the Sudan and then continue on their long and large journey. Although these are its two main sources, many other smaller rivers flow into it as well. The Nile River is known as the longest river in the world. The river is about 4,132 miles long and 1,107,000 square-miles deep.…

    • 625 Words
    • 3 Pages
    Good Essays

Related Topics