Waste Management Industry from finance.yahoo.com Industry Statistics Casella Was
ID: 1193893 • Letter: W
Question
Waste Management Industry from finance.yahoo.com Industry Statistics
Casella Waste Systems Inc. (CWST) primary Company Progressive Waste Solutions Ltd (PWS) is Competitor )2.(Financial Ratio Analysis) Using 2013 & 2014 Balance sheet & Income statement for two companies, financial ratios for two companies:
Current Ratio
= Current assets ÷ Current liabilities
PWS 2014:
= $295,640÷$330,434 = 0.89
PWS 2013: = $301,660÷$301,958 = 1
CWS 2014:
= $70,805÷$89,746 = 0.79
CWS 2013:
= $64,545÷$88,098 = 0.73
Quick Ratio
PWS 2014:
= ($295,640-$35,589) ÷$330,434 = 0.79
PWS 2013:
= ($301,660-$37,035) ÷$301,958 = 0.88
CWS 2014:
= ($70,805-$3,905-$8,790) ÷$89,746 = 0.65
CWS 2013:
= ($64,545-$3,494-$6,673) ÷$88,098 = 0.62
Ratio
PWS
PWS
CWS
CWS
2014
2013
2014
2013
Debt to Equity Ratio =Total liabilities/Total stock holder fund
1.75
1.63
-78.30
57.76
Time Interest Earned Ratio = EBIT/Interest Expenses
3.79
4.05
0.33
0*
Inventory Turnover Ratio =Cost of goods sold/Average Inventory
0**
0**
95.84
92.32
Receivable Turnover Ratio = Net Credit sales/Average receivables
8.92
8.54
9.21
8.67
Total Asset Ratio = Net Sales/Average Asset
0.59
0.59
0.76
0.69
Profit Margin = Net income/Net Sales
6.30%
5.82%
-4.64%
-11.89
Notes About Above Answers
- * In 2013 CWS income statement show EBIT is negative. IF there is no income, NO Time interest earned ratio. Hence Time interest earned ration is 0. - ** PWS have no cost of goods sold & inventory - 1)Using the 2014 ratios from Question 2, compare your company's ratios to both competitor's and industry averages. Then describe how good or bad ratios of your company are considered
Market Capitalization: 270B Price / Earnings: 39.1 Price / Book: -11.3 Net Profit Margin (mrq): 4.2% Price To Free Cash Flow (mrq): -1160.3 Return on Equity: 7.5% Total Debt / Equity: 118.5 Dividend Yield: 3.0%Explanation / Answer
In 2014, current ratio of PWS is more than CWS i.e. 0.89>0.79 which means that a company is hoarding assets instead of using them to grow the business , which is not wrong but it is something which can affect long-term returns.
Quick ratio in case of PWS decreases from 2013 to 2014 which means that the company's ability to meet day-to-day operating expenses and satisfy short term obligation as day become due has decreased. Similarly, in case of CWS the higher the quick ratio, the better it is. However, if the quick ratio is too high, it means that the company does not know how to fully utilise their asset to generate money. The company just lets the assets to "sit" there without doing any investment.
Debt to equity ratio increased in the case of PWS implying that the debt has increased i.e. in the form of loan from the banks. High debt might be bad for a company in the long run.
Debt to equity ratio decreased in the case of CWS and has been negative in 2014 implying that negative the company's net worth is negative. Very few bankers will extend loans to a company with a negative net worth unless there are extenuating circumstances, and there are assets that the company can pledge. A negative net worth means that the company probably is in trouble because it has been losing money for a long time.
Time Interest Earned Ratio in PWS from 2013 to 2014 is more than 1, the company is generating enough cash from its operations EBIT to meet its interest obligations. SImilarly, in CWS it is less than 1 , means the company is not generating enough cash from its operations EBIT to meet its interest obligations. The Company would then have to either use cash on hand to make up the difference or borrow funds.
Inventory Turnover Ratio in PWS is 0 which means cost of good sold had no impact on inventory. Similarly, in CWS the cost of goods sold has gone up which is not a good sign for the company.
Receivable Turnover Ratio in both CWS and PWS has increased which means that the efficiency is high for both firm in managing the credit it issues to customers. Because accounts receivable are moneys owed on a credit agreement without interest, by maintaining accounts receivable firms are indirectly extending interest-free loans to their clients.
Total Asset Ratio in both CWS and PWS is quite good a high asset turnover indicates company is doing well as the sales and revenue from it's business is quite high.
Profit margin in case of PWS is very high compared to CWS which means net income from sales is higher in PWS.
Return on asset ratio is better in PWS compared to CWS as in CWS it is negative. ROA in PWS implies that the management is employing the company's total assets properly to make a profit.
ROE for PWS in positive and for CWS is negative means that in PWS the profitability is very high as the profit generated by the company is very high with the money the shareholders have invested.
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