Financial performance:
Group revenue and Gross margin:
In J.B Hunt, the transaction value has been increased by 1.5% to 2456.7 million for 2014 whilst group revenue increased by 1.2% by 2234.2 million. Likewise, Group increased by 1.1% to 2789.1 million in 2015 and Group revenue increased by 0.3% to 2256 million. These are the sales and revenue history of J.B Hunt. Instead of a highly promoted marketplace, they focused on full price sales and minimized the number of promotions.
Cash flow:
J.B Hunt has high cash generative and priorities for the uses of cash. Firstly, the strategy is to develop a multi-channel and international company. Secondly, they pay for shareholders a dividend. The operating cash flow before taxation and financing
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If the company's dividend decreases, the company needs reinvestment or buy back stock. According to four-year analysis, J.B Hunt company's payout ratio has been increased every year hence there is no need of reinvestment.
Dividend per share ratio:
Dividend per share ratio is the sum of all dividends a company pays out over a fiscal year divided by the number of outstanding shares. It is used to share the profit of the company with shareholders. If this share decreases, it needs reinvestment in the operation, debt reduction and poor earnings of the company. In this case, there was an increase in the year of 2015 in J.B Hunt. It is used to share a company's profits with its shareholders. The reason for decreasing the value in dividend per share refers to reinvestment in the operation of a company, poor earnings, and debt reduction.
Dividend yield
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The liquidity ratios indicate a firm's ability to carry out enough revenue in order to cover its obligations and continue its operations.
Current ratio or Working capital: This ratio indicates whether it can respond to the current liabilities by using current assets. As many times, we can cover short-term obligations, as better for the company. This indicates that significant and high improvement in the liquidity. The increase in the current ratio 11.5 % will result in an increase in current assets where the current liabilities increased by 2.1%.
Quick ratio:
The quick ratio denotes that the company's ability should satisfy the short-term obligations. In brief, how many times can the firm respond its current liabilities by using current assets without the final stock? As many times it can cover its obligations, as better for the company.
In order a company to have a solid financial health, the quick ratio must be 1 time, which is a sign that the liquidity level of a company is high. In J.B Hunt, the quick ratio increased from the last year, which shows that liquidity level of the company is high. It has the ability to pay off short-term obligations without the base on the sale of its
In order to increase liquidity it needs to increase its cash by converting assets into cash (sales). Additionally, as a quick sell retail company, JBH does not give large credit sales to its customers, instead most of sales are made by cash or cash equivalent. This gives the company less account receivables and bad debts. As such a lower quick ratio than industry average is common and should not raise any liquidity issues.
Quick ratio is another measure of liquidity. In quick ratio we consider only liquid assets and its standard ratio is 1:1. Quick ratio of Peyton Approved is 7.63. Thus, there is no doubt that the company has got excellent liquidity. Company has enough liquid assets to pay off current liabilities.
Chipotle’s quick ratio is 3.28, slightly lower than its current ratio. Yum! Foods quick ratio is .62, which is also slightly lower than their current ratio. Both ratios are acceptable as long as A/R is not expected to slow. Chipotle appears to be a significantly stronger company than Yum! Foods. The industry average is not given.
This ratio is similar to current ratio, except that it excludes inventory from current assets. Inventory is subtracted because it is considered to be less liquid than other current assets, that is, it cannot be easily used to pay for the company’s current liabilities. A company having a quick ratio of at least 1.0, is considered to be financially stable. It has sufficient liquid assets and hence, it will be able to pay back its debts easily (Qasim Saleem et al., 2011).
Looking at the chart in Appendix D, the quick ratio for Bombardier is .53 and the industry is at .62 for the most recent quarter (MRQ). This is not a number that I would feel comfortable with. A low quick ratio can mean that the company is in trouble. The current ratio shows at 1.13 for Bombardier and .94 for the industry. Because this ratio is higher than the industry average, it shows that the firm has the ability to pay back its short-term liabilities such as debt and payables with its short-term assets like inventory, receivables, and cash.
These ratios are computed to judge the short term liquidity of the business. Two most important liquidity ratios are current ratio and quick ratio. These ratios determine the ability of firm to meets its current liabilities out of its current/quick assets.
The Quick Ratio also known as Acid Ratio is used by firms to determine liquidity position. It explains if the firm is able to pay all of their current debt liabilities. (Dyson, 2010) The graph above illustrates that over the period from 2007 to 2011 quick ratio was not more that 1, which means that their debts might not be covered all. The graph also indicates that a peak was in 2011.
Liquidity ratio. The firm’s liquidity shows a downward trend through time. The current ratio is decreasing because the growth in current liabilities outpaces the growth of current assets. The quick ratio is also declining but not as fast as the current ratio. From 1991 to 1992, it only decreased 0.35 units while the current ratio decreased 0.93 units. Looking at the common size balance sheet, we also see that the percentage of inventory is growing from 33% to 48% indicating Mark X could not convert its inventory to cash.
Liquidity In analyzing liquidity of the company, the current ratio is not very telling of a falling company. The company increased its ratio throughout the period of the income statement thus building upon its company assets and allowing for a 6-1 ratio of assets over its liabilities. This implies the company is still able to operate sufficiently even though it did not make its optimum current ratio of about 8-1. However, when one takes the inventory out of the equation with the quick ratio, the numbers show the true strength of short term liquidity. The numbers are still good, and do not indicate failure – but are
Current Ratio is the measure of short-term liquidity. It indicates that the ability of an entity to meet its
First, current payout policies directly increase payout ratio by issuing large amount of new shares. High payout ratio shows that the company has to spare a large amount of cash to pay dividends rather than invest in more profitable projects.
These ratios help company in determining its capability to pay short-term debts. Liquidity ratios inform about, how quickly a firm can obtain cash by liquidating its current assets in order to pay its liabilities. General liquidity ratios are: current ratio and quick ratio. Current ration can be obtain by dividing company’s current assets by its’ current liabilities. Generally a current ratio of two is considered as good (Cleverley et al., 2011). Quick ratio also known as acid test determines company’s liabilities that need to be fulfilled on urgent basis. Quick ratio can be obtained by dividing quick assets by current liabilities. Quick ratio is considered as stricter because it excludes inventories from current assets. Generally a quick ratio of 1:1 is considered as good for the company. Higher quick
The quick ratio reflects on a company’s ability to meet its current liabilities without liquidating inventories that could require markdowns. It is a more stringent test of liquidity than the current ratio and may provide more insight into company liquidity in some cases. For Colgate-Palmolive, the quick ratio has declined from 0.73 in 2008 to 0.58 in 2010. While this does not necessarily mean a problem, a higher current ratio and quick ratio analysis will mean that the company will not have difficulty in meeting its short-term obligations from its operations and not by liquidating its assets.
Working capital is the excess of a company’s current assets over its current liabilities. Financially healthy firms have positive working capitals.
The quick ratio of 1.46 is a further analysis into the actual monetary values that are highly liquid and excluding fixed assets as part of the assets. The CFO/Avg. current liabilities also show a healthy 73%, 28% in 2004, on average of which is still higher than the industry.