Lawsons Case Summary

As concerns profitability, the company seems quite profitable; however, looking at liquidity, the problems appear. Current ratio shows that the firm has enough money in hand to pay short-term obligations. However, quick ratio illustrates that the company

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A more tell tale sign is the quick ratio, or acid test, which has increased year after year. Debt to total assets has decreased over 5% since 2001, indicating less financing of current and long term debt and more company assets. Their cash debt coverage far surpasses the ideal 20%, indicating a high level of solvency with sufficient funds and assets to satisfy all debtors. Asset turnover has more or less maintained at right around 1.6, signifying a turnover rate of just less than 180 times per year.

When a company is growing so fast, it is a good idea to look at how it is paying for the growth. A good way to do that is by looking at the current ratio because it shows assets compared to liabilities. CMG’s current ratio over this time period has varied a good bit: 2013 = 3.34, 2014 = 3.5, and 2015 = 2.91. What stands out in that is the decrease in 2015 which could indicate issues with the company. However, after looking more in depth, it can be seen that this decrease is most likely related to the company’s fast growth in that year and its need to finance the growth. In addition, CMG’s

The payout ratio has been consistently low though dividend has been increasing and the major portion of income is retained. Increasing the dividend is not a bad idea, because it still remains a minute portion of the total income. Therefore, the net income is not growing with the increase in equity. In summation, so the financing is not an issue but it seems the operating performance has not been well maintained over the years.

S&S Air’s current and cash ratios are below average as compared to the entire industry. These ratios show that S&S has less liquidity than others in the industry. By comparing these ratios we can see that S&S Air has less inventory, as compared to current liabilities, than the median of other companies. Based on cash ratio, the company has possible access to short-term loans. From receivables turnover ratio we

From 2006 to 2008 Jamba posted liquidity ratios above the industry average. Although Jamba’s ratios were above the industry average, their liquidity was somewhat underwhelming. Their current ratios of 0.89, 0.79, and 0.65 during that timeframe indicate that Jamba consistently had more liabilities to be fulfilled during the current year than they had assets in the form of liquid instruments to cover those liabilities. The structure of Jamba’s current assets is encouraging, inventories are responsible for a very low percentage of current assets, as a result, the company has a very impressive quick ratio. Based on Jamba’s balance sheet, it appears Jamba’s reduction of cash from 2006 to 2007 can be directly correlated to their increase

The Total Debt to Total Asset ratio figure for the company has show a downward trend over the last three years. Both the assets and the liabilities of the company has declined, however, the decline in the company's liabilities have declined faster then their assets. From an investor standpoint, this is good as the company is now able to take on additional debt to help support growth. This additional debt, however, must first be viewed along side the company's Times Interest Earned to ensure the company can support the debt. In a time of increased sales however, the company has been able to increase capital equipments and pay down debt which is really good sign for the company.

Shoppers Drug Mart Limited is not in a good financial position in terms of liquidity and being able to pay out its liabilities. Over the three above indicated fiscal periods, Shoppers had a current ratio on average of 1.54, which means that it has $1.54 of current assets available to cover each $1 of current liabilities. The higher the current ratio is for a firm, the better position the company’s liquidity position is. Over the course of a year or over the course of the company’s operating cycle (whichever is longer), resources would be tight for Shoppers but they would be able to pay out their current obligations as the current ratio is greater than 1. In the time period less than a year or the operating cycle, repayment of the firm’s liabilities may prove to be challenging. The quick ratio also measures a company’s liquidity position but there

Wonga’s mission is to deal with occasional and short-term cash flow demands for individuals and businesses, with equally short term solutions by using automated and real-time risk technology to process a wide number of requests. Therefore, the company can make instant decisions for lending in seconds at anytime the customers require. The loans available by the website vary from £1 to £400 and the payback period of 1 to 38 days. Although Wonga can approve loans through paying into bank account in a few minutes, the company are highly selective about the customers who they believe can repay quickly. This means there are about two-third of first time applicants are declined. However, Wonga have provided millions of loans via the website and smart phones which helps the company to achieve industry-leading low arrear rates and world-class customer satisfaction. “Whilst there is not much difference in terms of costs between Boodle and Wonga, we feel that Wonga is just slightly ahead in terms of optimising their user experience, as well as communicating the product in a professional yet easy-to-follow manner which makes Wonga the best payday company in South Africa.”(payadayloans.top10reviews)

You current ratio is 1.70, which is a weakness. This is calculated by dividing current assets by current liabilities. This ratio measures whether or not a firm has enough resources to pay its debts over the next 12 months. Compared to year 11’s current ratio of 1.86, this indicated a slight decrease. In comparison to the industry data quartiles, this specific ratio falls below the first two quartiles of 3.1 and 2.1, but it slightly above the third quartile of 1.4. For company G, these numbers indicate a weakness, and the current ratio indicates the company would experience difficulties repaying its obligations in the short term. Improvements should be made in this area for Company G.

In regards to Lawson’s liquidity ratios, the current ratio is constantly declining over a four year period, ranging from 1.02:1 to 2.97:1. With a low of 1.02:1, this indicates that the company is able to pay $1.02 for each $1 of its current liabilities. The ratio has dropped significantly, indicating that there are issues related to liquidity. This may be caused by lack of capital so the company can pay back any deficits. Comparing the ratios to the industries average (1.8:1) supports the idea that Lawson’s lacks performance in this category. This may be problematic in regards to whether or not the company’s short-term assets are readily available to pay off its short-term liabilities. If ratios continue to drop in the future, the company will likely run into more problems regarding debt.

With respect to the company's balance sheet, the company is in a decent financial position despite the losses. In terms of liquidity, the company has remained liquid

The liquidity ratios show that both companies A and B might not face liquidity problem. Current ratio and quick ratio of company A are higher than company B. Company A holds more current asset in term of cash and short term investments. These cash and short term investments can be used to invest in the future.

Looking at the capital structure, the Debt/Equity ratio has moved in a favorable direction from 1.39 to 1.36