Cintas Time Trend Analysis
Cintas Corporation
Cintas Corporation Time-Trend Analysis
Cintas Corporation, founded in 1968 by Richard T. Farmer, is an American company that provides special services and products to businesses across North America, Latin America, Europe, and Asia. Cintas categorizes its business into four different operating segments. The Rental Uniforms and Ancillary Products operating segment, the Uniform Direct Sales operating segment, the First Aid, Safety, and Fire Protection Services operating segment, and the Document Management Services operating segments make up the four different operating segments of Cintas Corporation. Cintas Corporation designs and manufactures professional uniforms …show more content…
for companies and provides other products such as entrance mats, restroom supplies, and first aid supplies. Cintas provides these products and services to over 800,000 businesses.
Cintas Corporation is headquartered in Cincinnati, Ohio. Cintas operates 430 facilities across Canada and the United States. Cintas also has six manufacturing plants and nine distribution centers. All of these facilities help to employ over 30,000 people. Cintas went public in 1983 and are also the largest company in their industry. Cintas main competitors are Alsco, ARAMARK, and G&K Services. In the fiscal year 2011, Cintas Corporation revenues were $3.8 billion with a net income of $247 million. Cintas is traded over the Nasdaq Global Market under the symbol CTAS. On the next page is a table representing the various ratios needed to properly conduct a time-trend analysis for Cintas Corporation.
2009
2010
2011
Profitability
Profit Margin
6.00%
6.10%
6.50%
Return on Assets
6.08%
5.43%
5.67%
Return on Equity
9.56%
8.51%
10.73%
Asset Management
Total Asset Turnover
1.02 Times
.89 Times
.88 Times
Receivables Turnover
8.39 Times
8.24 Times
7.49 Times
Inventory Turnover
10.98 Times
12.10 Times
8.82 Times
Leverage
Debt-equity Ratio
.57 Times
.57 Times
.89 Times
Equity Multiplier
1.57 Times
1.57 Times
1.89 Times
Times Interest Earned
8.20 Times
8.30 Times
8.90 Times
Cintas Corporation Time-Trend Analysis Table
The previous page displays the time-trend table for Cintas Corporation from the year 2009 to 2011.
The table focuses on the profitability, the asset management and the leverage of Cintas Corporation. First lets focus on Cintas Corporation’s profitability. Cintas has steadily improved from 2009 to 2011. Profit Margin for Cintas has increased by .5% from 2009 to 2011. From 2009 to 2011 Cintas has increased its revenues, which is usually a good thing, but they have also allowed expenses to increase. Their profit margin was able to increase because Cintas increased revenue at a greater rate than their expenses. Cintas has also improved their return on equity from 2009 to 2011. Cintas return on equity improved by 1.17%. Growing return on equity is vital for Cintas profitability. The growing return on equity shows investors that Cintas could be a good company for their investment. With more investments come more opportunities for Cintas to increase revenue and profitability. The last ratio under profitability is return on assets. While profit margin and return on equity increased, return on assets decreased. Cintas return on assets decreased by .41% from 2009 to 2010. This is not good for Cintas. When Cintas return on assets decreased it means that Cintas did not do a good job of converting its assets or investment into profits for their company. This may have occurred because Cintas did not do a good job of using it’s investments and placing them in the correct areas that would benefit profits the most. Overall, Cintas profitability improved over the three-year span. One recommendation to help return on assets would be to figure out which area of the company needs the most investment and will give you the better return on your investment or assets. This could involve some type of analyst of each individual segment of
Cintas. Cintas Corporation’s biggest weakness was asset management. From 2009 to 2011, Cintas Corporations total asset turnover, receivables turnover, and inventory turnover all deteriorated. The decrease in total asset turnover shows that Cintas is not using its assets to produce better sales . The low total asset turnover could be caused by the high profit margins. The higher the profit margins the lower the total asset turnover, as seen in the table. You can see the increase in profit margin from 2009 to 2011 while simultaneously the decrease in total asset turnover from 2009 to 2011. Although a slight decrease from 2009 to 2011, Cintas maintains a high ratio of receivables turnover. Cintas maintains this ratio by staying extending credit and collecting their money in a timely fashion. Cintas turnover inventory turnover has decreased dramatically from 2010 to 2011. This may be because of the high unemployment rate. Cintas supplies employees with uniforms to wear to work. If there are no employees to go to work than Cintas’s sales will decrease and they wont be able to have an effective inventory turnover. A recommendation for how Cintas can improve their asset management would be to decrease inventory to a more realistic point that would help lower total assets as well as improve the inventory turnover ratio. Cintas inventory almost doubled from 2010 to 2011 leading to an increase in total assets and decrease in inventory turnover. Cintas Corporation had an interesting leverage time trend. Cintas debt-equity ratio increased by .32% from 2009 to 2011. This means that Cintas was taking a risk by using more debt to try and increase sales. In Cintas situation the risk did not pay off. Instead stock holder equity decreased from 2010 to 2011. Cintas equity multiplier also increased from 2009 to 2011. Cintas is using more debt to fund their assets. Cintas may be doing this to help grow their company and take it to the next level in hoping that they will generate enough sales that they can increase their profit margin. Cintas has a high interest earned over the three-year span. They should be using some of their earnings and investing into different parts of the company that can help increase sales. A recommendation for Cintas would be to lower their time interest earned and invest it into new projects that the company is working on. Cintas is always trying to design safe and new designs for employees all over America. Incorporating some of their earnings into extensive research would greatly benefit Cintas. This type of analysis allows for someone to develop greater insights about a company by simplifying the information. The table makes the information much easier to read and follow over the three-year period. The table helps to see the trends and where companies are struggling and where they are striving. The information collected and calculate was very valuable when evaluating the firm’s performance. It made the information and trends easier to read and understand. It helped take away all the irrelevant information at the time and understand the connection between Cintas’s performance and their profitability, asset management, and leverage.
Works Cited
"Cintas Corporation." Yahoo! Finance. Yahoo, n.d. Web. 11 Apr 2012. .
"Investopedia." . N.p., n.d. Web. 11 Apr 2012. .
".Cintas: The Service of Professionals." . N.p., 2012. Web. 11 Apr 2012.
Cintas Corporation Time-Trend Analysis
Cintas Corporation, founded in 1968 by Richard T. Farmer, is an American company that provides special services and products to businesses across North America, Latin America, Europe, and Asia. Cintas categorizes its business into four different operating segments. The Rental Uniforms and Ancillary Products operating segment, the Uniform Direct Sales operating segment, the First Aid, Safety, and Fire Protection Services operating segment, and the Document Management Services operating segments make up the four different operating segments of Cintas Corporation. Cintas Corporation designs and manufactures professional uniforms …show more content…
for companies and provides other products such as entrance mats, restroom supplies, and first aid supplies. Cintas provides these products and services to over 800,000 businesses.
Cintas Corporation is headquartered in Cincinnati, Ohio. Cintas operates 430 facilities across Canada and the United States. Cintas also has six manufacturing plants and nine distribution centers. All of these facilities help to employ over 30,000 people. Cintas went public in 1983 and are also the largest company in their industry. Cintas main competitors are Alsco, ARAMARK, and G&K Services. In the fiscal year 2011, Cintas Corporation revenues were $3.8 billion with a net income of $247 million. Cintas is traded over the Nasdaq Global Market under the symbol CTAS. On the next page is a table representing the various ratios needed to properly conduct a time-trend analysis for Cintas Corporation.
2009
2010
2011
Profitability
Profit Margin
6.00%
6.10%
6.50%
Return on Assets
6.08%
5.43%
5.67%
Return on Equity
9.56%
8.51%
10.73%
Asset Management
Total Asset Turnover
1.02 Times
.89 Times
.88 Times
Receivables Turnover
8.39 Times
8.24 Times
7.49 Times
Inventory Turnover
10.98 Times
12.10 Times
8.82 Times
Leverage
Debt-equity Ratio
.57 Times
.57 Times
.89 Times
Equity Multiplier
1.57 Times
1.57 Times
1.89 Times
Times Interest Earned
8.20 Times
8.30 Times
8.90 Times
Cintas Corporation Time-Trend Analysis Table
The previous page displays the time-trend table for Cintas Corporation from the year 2009 to 2011.
The table focuses on the profitability, the asset management and the leverage of Cintas Corporation. First lets focus on Cintas Corporation’s profitability. Cintas has steadily improved from 2009 to 2011. Profit Margin for Cintas has increased by .5% from 2009 to 2011. From 2009 to 2011 Cintas has increased its revenues, which is usually a good thing, but they have also allowed expenses to increase. Their profit margin was able to increase because Cintas increased revenue at a greater rate than their expenses. Cintas has also improved their return on equity from 2009 to 2011. Cintas return on equity improved by 1.17%. Growing return on equity is vital for Cintas profitability. The growing return on equity shows investors that Cintas could be a good company for their investment. With more investments come more opportunities for Cintas to increase revenue and profitability. The last ratio under profitability is return on assets. While profit margin and return on equity increased, return on assets decreased. Cintas return on assets decreased by .41% from 2009 to 2010. This is not good for Cintas. When Cintas return on assets decreased it means that Cintas did not do a good job of converting its assets or investment into profits for their company. This may have occurred because Cintas did not do a good job of using it’s investments and placing them in the correct areas that would benefit profits the most. Overall, Cintas profitability improved over the three-year span. One recommendation to help return on assets would be to figure out which area of the company needs the most investment and will give you the better return on your investment or assets. This could involve some type of analyst of each individual segment of
Cintas. Cintas Corporation’s biggest weakness was asset management. From 2009 to 2011, Cintas Corporations total asset turnover, receivables turnover, and inventory turnover all deteriorated. The decrease in total asset turnover shows that Cintas is not using its assets to produce better sales . The low total asset turnover could be caused by the high profit margins. The higher the profit margins the lower the total asset turnover, as seen in the table. You can see the increase in profit margin from 2009 to 2011 while simultaneously the decrease in total asset turnover from 2009 to 2011. Although a slight decrease from 2009 to 2011, Cintas maintains a high ratio of receivables turnover. Cintas maintains this ratio by staying extending credit and collecting their money in a timely fashion. Cintas turnover inventory turnover has decreased dramatically from 2010 to 2011. This may be because of the high unemployment rate. Cintas supplies employees with uniforms to wear to work. If there are no employees to go to work than Cintas’s sales will decrease and they wont be able to have an effective inventory turnover. A recommendation for how Cintas can improve their asset management would be to decrease inventory to a more realistic point that would help lower total assets as well as improve the inventory turnover ratio. Cintas inventory almost doubled from 2010 to 2011 leading to an increase in total assets and decrease in inventory turnover. Cintas Corporation had an interesting leverage time trend. Cintas debt-equity ratio increased by .32% from 2009 to 2011. This means that Cintas was taking a risk by using more debt to try and increase sales. In Cintas situation the risk did not pay off. Instead stock holder equity decreased from 2010 to 2011. Cintas equity multiplier also increased from 2009 to 2011. Cintas is using more debt to fund their assets. Cintas may be doing this to help grow their company and take it to the next level in hoping that they will generate enough sales that they can increase their profit margin. Cintas has a high interest earned over the three-year span. They should be using some of their earnings and investing into different parts of the company that can help increase sales. A recommendation for Cintas would be to lower their time interest earned and invest it into new projects that the company is working on. Cintas is always trying to design safe and new designs for employees all over America. Incorporating some of their earnings into extensive research would greatly benefit Cintas. This type of analysis allows for someone to develop greater insights about a company by simplifying the information. The table makes the information much easier to read and follow over the three-year period. The table helps to see the trends and where companies are struggling and where they are striving. The information collected and calculate was very valuable when evaluating the firm’s performance. It made the information and trends easier to read and understand. It helped take away all the irrelevant information at the time and understand the connection between Cintas’s performance and their profitability, asset management, and leverage.
Works Cited
"Cintas Corporation." Yahoo! Finance. Yahoo, n.d. Web. 11 Apr 2012. .
"Investopedia." . N.p., n.d. Web. 11 Apr 2012. .
".Cintas: The Service of Professionals." . N.p., 2012. Web. 11 Apr 2012.