Thesis topic [PhD] Metrics and Economies of Comple Essay Researchpaper Help

Thesis topic [PhD] Metrics and Economies of Comple Essay Researchpaper Help

Question 1 Comparison between Q1 and Q2 in 2016. The comparison was made by making use of horizontal and vertical analysis. Horizontal analysis The horizontal analysis was done on the balance sheet by comparing total equity, liabilities and equity, cash flow and change in cash/credit line. The total assets increased by 31% from quarter 1 to quarter 2 with a difference of $10.9 M. This is an indication that the company witnessed an increase in the value of its assets and this can be an insinuation of good management of assets. As shown in the calculation, the total equity increased from Q1 to Q2 with a difference of $2.8 million. This was represented by 63% increase. The same situation is shown by liabilities and equity, which also increased by 31% from Q1 to Q2. This is an indication that the companies increased the available liability at its disposal. As the result, the company reduced its reliance on liabilities and instead put much focus on its assets. The cash flow of ABC company also increased by a difference of $9.97 M, represented by 75%. This means that the amount of cash flowing in and out of the company increased significantly from quarter 1 and quarter 2. This also symbolizes good management of the company s operations. The income statement was also analyzed for comparison between q1 and q2. From the analysis, it comes out that the company s operating profit increased by a larger percentage of 333% from q1 to quarter 2. This increase in operating profit translated to corresponding increase in net income by 259%. This is a good indication that ABC company was able to maintain an effective operation towards realizing an increased income from operation. It is also an indication that the company was able to increase its income thereby reflecting on its ability to pay the stakeholders. Net income/equity The net income/equity increased from -40% to 39% from q1 to q2. This shows that the percentage of income coming from owner s equity increased for the company. Vertical analysis The vertical analysis shows the fraction increase/decrease between the elements contained in the financial statement for quarter 1 and quarter 2. The percentage of liabilities and equity represented by owners equity increased from q1 to q2, from 13% to 16%. This also depict the fact that the company increased its reliance on equity between the two quarters. The value of non-current assets (made up of plant & equip first cost and cumulative depreciation) also increased from 40% representation of the total assets to 42% representation. Consequently, this is a true depiction that the company managed to increase the value of its non-current assets. Question 2 Market share ABC = $66.2 billion RTD = 65.2 billion MEA = 58.3 Billion As shown by the market share comparison, ABC has the largest market share of all the three competitors. This shows that the company owns the largest part of the market in which it operates. As the result, it comes out that the company s operation are efficient and withstand the stiff competition in the industry. Total assets ABC = $45,801,309 RTD = $36,093,343 MEA = $34,934,234 By adding the total equity to liabilities, it comes out that ABC owns the largest amount of total assets as compared to RTD and MEA. This is an indication that ABC exhibits a higher value of assets than its counterparts; in which, the company does not rely much on liabilities to support its operation. As the result, ABC is much efficient than its competitors. Operating margin ABC = 8.9% RTD = 9.1% MEA = 7.8% The comparison is on the basis of return on sales recorded by the companies in quarter 2. As shown, RTD has a slightly higher operating margin than ABC, with MEA having the least. From this, one can make conclusion that the company has a slightly lower return on sales but this does not insinuate much because its value is almost levelling the top company in the market. Variable cost comparison ABC = $23,093,326 RTD = $30,023,343 MEA = $34,354,346 As shown by the above data, ABC has the least variable cost amount in its operations followed by RTD and finally MEA. This indicates that the company is most efficient in managing its expenses to a minimum amount; thereby having less impact on its net income. This explains much why ABC has the highest income when compared to its closest competitor in the market. Conclusion In conclusion, the above analysis of financial statements shows that ABC is best placed in the market with the ability to withstand competition.


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