Question

Review the financial statements of a public company Under "Get Quotes", type in the symbol of a public corporation. For instance, F is Ford Motor Co. Symbols can be looked up as well on Yahoo!. Then hit "Get Quotes". After you've gone to the company's webpage, take a look at the financial information on the company. Tell us about your thoughts as to how well the company is run from a financial standpoint.

Answer 1

To understand, how a company is performing financially, we analyse three things, mainly in a public company. These are Income Statement, Balance Sheet and Cash Flow statement.

1. Income Statement:

a) Gross Profit Trend - In this case the company's gross profit trend is going down starting from 2015 to 2018 from 18,148,000 to 14,678,000, which is a fall of 19% over 4 years of period. Here the sales of company is going up year on year but cost of revenue is also going up with higher rate and lowering down our gross profit. Not a good sign.

b)Operating Expenses - Here the company's operating expenses have gone up. Not a good sign for a company.

c) Net Income after tax - It is moving in zigzag pattern and it id difficult to identify a trend in it, so we prefer to an average of it and it is coming around 35% of gross profit. It is a good sign.

2. Balance Sheet:

a) Current Assets - Here in this company its current assets have increased from 102587000 to 113585000 in 4 years, which is increase of 10.7% over 4 years. Its means that today, company is in better position to pay its current liabilities.

b) Total Assets - Company's total assets has also increased, which is showing growth in wealth of company.

c) Current Liabilities - Its has increased with a rate of 16%, more than current asset rate, which is not good for the company, but it is not that critical.

d) Cash Ratio - Cash ratio of company has improved from 0.26 to 0.34. Good for company.

e) Stock holder equity - It has also improved in last 4 years giving good returns to shareholders. Retained earnings has also increased in past years. Good for company.

3. Cash Flow:

a) Cash from operating activities - It has gone down in lat 4 years. Not a good sign.

b) Cash from investing activities - it has gone down in last 4 years, so company will have more cash in hand in future for other activities and expenses. Good sign for a company.

c) Cash from financing activities - Company has paid good dividends and less borrowings, so a good sign.

d) Total cash flow - it is negative and gone down. Need to improve. Not a good sign.

Overall this company is performing decent, but they need to reduce their cost of revenue and operating expenses to generate more income for their capital expenditure.Also, need to control dividend payout.