SciTronics Draft final
Introduction
SciTronics is a medical device company. In exhibit 1 and 2 financial data sources are given, which are consist of Income Statement, Balance Sheet, and Cash Flow. Financial ratios are useful indicators of a firm 's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm 's financials to those of other firms.
Financial ratios can be classified according to the information they provide. The following types of ratios are discussed in SciTronics case study:
Liquidity ratios
Asset turnover ratios
Financial leverage ratios
Profitability ratios
By analyzing the financial ratios given for SciTronics and considering the 9 step of corporate financial system below is an attempt for three questions.
Question 1:
What is your assessment of the performance of SciTronics on 2008 versus 2005?
SciTronics performance during 2005-2008 periods demonstrates a healthy company considering the Ratios mentioned above.
In 2005 SciTronics had a profit of 3.4% (5,000/147,000) and a tremendous improvement happened during 2008 which is a profit of 5.64% (14,000/244,000). We can say that SciTronics profit represents a 2.34% increase from 2005 to 2008.
Return on Equity is another measure of company’s profitability. Comparing the return of equity of SciTronics in 2005 8.20% ($5,000/$16,000) and 2008 18.67% ($14,000/$75,000) represents an increase of 10.47%. It shows that SciTronics utilizes shareholder’s funds in a profitable strategy. In addition calculating the compound annual growth rate of SciTronics in 4 year from 2005 – 2008 gives an improvement of 20.69% which shows consumer satisfaction and market base products.
SciTronics performance during 2005-2008 periods demonstrates a healthy company. We can understand this through Profitability Ratios which offer several different measures of the success of the company at generating profit.
SciTronics is a medical device company. In exhibit 1 and 2 financial data sources are given, which are consist of Income Statement, Balance Sheet, and Cash Flow. Financial ratios are useful indicators of a firm 's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm 's financials to those of other firms.
Financial ratios can be classified according to the information they provide. The following types of ratios are discussed in SciTronics case study:
Liquidity ratios
Asset turnover ratios
Financial leverage ratios
Profitability ratios
By analyzing the financial ratios given for SciTronics and considering the 9 step of corporate financial system below is an attempt for three questions.
Question 1:
What is your assessment of the performance of SciTronics on 2008 versus 2005?
SciTronics performance during 2005-2008 periods demonstrates a healthy company considering the Ratios mentioned above.
In 2005 SciTronics had a profit of 3.4% (5,000/147,000) and a tremendous improvement happened during 2008 which is a profit of 5.64% (14,000/244,000). We can say that SciTronics profit represents a 2.34% increase from 2005 to 2008.
Return on Equity is another measure of company’s profitability. Comparing the return of equity of SciTronics in 2005 8.20% ($5,000/$16,000) and 2008 18.67% ($14,000/$75,000) represents an increase of 10.47%. It shows that SciTronics utilizes shareholder’s funds in a profitable strategy. In addition calculating the compound annual growth rate of SciTronics in 4 year from 2005 – 2008 gives an improvement of 20.69% which shows consumer satisfaction and market base products.
SciTronics performance during 2005-2008 periods demonstrates a healthy company. We can understand this through Profitability Ratios which offer several different measures of the success of the company at generating profit.