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SPRINGFIELD

NATIONAL BANK

Presented By Group A
Performance Ratios

SpringField National Bank - Financial Analysis for Dawson Stores, Inc


Liquidity Ratios
§ Generally a current Ratio of 2 is considered
as indicative of adequate liquidity.
§ The current ratio has decreased down to
1.67
§ Acid Ratio of 1 is considered normal
§ But it is deteriorating over the 4 years
§ so the company has somewhat weak
liquidity

SpringField National Bank - Financial Analysis for Dawson Stores, Inc


Return On Assets
 ROA is a useful measure to evaluate how
well an enterprise has used its funds
 Since, it is increasing over the past 4 years
the company is utilizing its funds better

SpringField National Bank - Financial Analysis for Dawson Stores, Inc


Return on Equity
 Important to current stakeholders and
perspective investors
 Relates earning to owners investments
 Average ROE for most investment
companies was 7% to 10%
 ROE has increased from 8%-14%
 The reason for this is the debt financing
pattern of the company

SpringField National Bank - Financial Analysis for Dawson Stores, Inc


Financial Position

SpringField National Bank - Financial Analysis for Dawson Stores, Inc


Financial Leverage Ratio
 Leverage means using given resources in
such a way that the potential outcome is
magnified
 It is expressed as total assets as times of
the shareholder’s equity
 The FLR is almost constant over the given 4
years
 This indicates that the company is using
the same fraction of shareholder’s equity
on assets

SpringField National Bank - Financial Analysis for Dawson Stores, Inc


Debt Equity Ratio
 Indicates the ratio to which business relies
on debt financing
 Upper Acceptable limit is usually 2:1
 With long term debt no more than 33%
 High debt ratio indicates a possible
difficulty in paying interest and principal
while obtaining more funding
 Company’s debt equity ratio is decreassing
implies that company’s reliance on debt is
decreasing

SpringField National Bank - Financial Analysis for Dawson Stores, Inc


Debt Capitalization Ratio
 By using this ratio investors can identify the
amount of leverage utilizes by the company
 It helps to compare the co. with others and
analyse the comapnys risk exposure
 Cos that finance a greater portion of their
finance by debt are considered riskier
 Here,Debt Capitalization Ratio is decreasing
 Thus, the cos. Risk exposure is reducing over
the years

SpringField National Bank - Financial Analysis for Dawson Stores, Inc


Cash Flow/ Debt
 Cash Flow/ Debt is increasing
 This implies that the company is recording
better cash flows
 This implies an improving financial position
for the company over the 4 years

SpringField National Bank - Financial Analysis for Dawson Stores, Inc


Working Capital
 The working capital indicates the measure of
funds available to purchase inputs and
inventories after the sale of current assets
and pay-offs of all current liabilities
 The company’s working capital is increasing
 This implies that company’s purchasing power
is increasing over the 4 years

SpringField National Bank - Financial Analysis for Dawson Stores, Inc


CONCLUSION
 Over the 4 years, the financial position of the
company is improving
 This can be concluded from the following
ratios as mentioned earlier:
 D/E ratio
 FLR
Ø Also, the debt/capitalization ratio is
decreasing
Ø Thus the risk associated with the company is
also reducing
Ø As a result, Stefanie Anderson should conclude
that it a good credit risk

SpringField National Bank - Financial Analysis for Dawson Stores, Inc


Thank You!

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