FINM2400 Part 3
3. What can Transport Solutions learn from the numbers you have computed? Use the ratios and common size statements to identify areas where TSL can improve relative to KSC. Also identify any areas where TSL is better managed relative to KSC. For each strength and weakness identified, explain what the ratio measures and give examples of how a company can improve this ratio. (You should identify at least 5 ratios as either strengths or weaknesses). At the conclusion of your analysis, recommend a single area for TSL management to focus on – this should be the area where improvement will have the greatest impact on the profitability of Transport Solutions. Be sure to justify the choice of this area. You should write no more than 700 words. Submit your answer as a pdf file and note the word count at the bottom of the page.
From the numbers we computed, Transport Solutions could roughly see how well each business is doing just by looking at the ratios. The ratios are separated into six categories, with each category showing a different measure. These categories are liquidity measures, long-term solvency measures, cash and asset management measures, market value measures, the DuPont analysis and lastly the internal and sustainable growth. The liquidity measure is also known as short-term solvency. As the name suggests, short-term solvency ratios are intended to provide information about a firm’s liquidity. The primary concern in the firm’s ability to pay without undue stress, its bills that become payable in the short term. Consequently, these ratio focuses on current assets and current liabilities. Long-term solvency ratio is intended to address the firm’s long-run ability to meet its obligations or financial leverage. These ratios are sometimes called financial leverage ratios. Assets management measures are sometimes called asset utilization ratios. The specific ratios are intended to measure is how efficiently, or intensively, a firm uses its assets to
From the numbers we computed, Transport Solutions could roughly see how well each business is doing just by looking at the ratios. The ratios are separated into six categories, with each category showing a different measure. These categories are liquidity measures, long-term solvency measures, cash and asset management measures, market value measures, the DuPont analysis and lastly the internal and sustainable growth. The liquidity measure is also known as short-term solvency. As the name suggests, short-term solvency ratios are intended to provide information about a firm’s liquidity. The primary concern in the firm’s ability to pay without undue stress, its bills that become payable in the short term. Consequently, these ratio focuses on current assets and current liabilities. Long-term solvency ratio is intended to address the firm’s long-run ability to meet its obligations or financial leverage. These ratios are sometimes called financial leverage ratios. Assets management measures are sometimes called asset utilization ratios. The specific ratios are intended to measure is how efficiently, or intensively, a firm uses its assets to