Unit 2 Individual Project
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Unit 1 IP 1
Petra Husnajova
Unit 2 Individual Project
Colorado Technical University
April 12th, 2023
Unit 2 IP 2
Introduction
Per Mary’s request for a comparative analysis, I have conducted research and obtained financial statements from two other companies that are the same industry as Apix Printing. We will be comparing Apix Printing to Issuer Direct Corporation (ISDR) and ARC Document Solutions (ARC). We will be discussing and comparing all three companies and their current ratio, long-term debt to equity ratio, gross margin percentage, net profit margin percentage and the return on equity percentage. Current Ratio
The current ratio, a liquidity ratio, assesses the company’s capability to pay off short-
term debts that are due within a year (Fernando, 2023). This can be calculated by taking the current assets and dividing by the current liabilities. After conducting the current ratio calculations for all three companies, we have Apex’s current ratio for 2013 at 1.130, ISDR at .302 and ARC at 1.481. When all of company's short-term obligations are due at once, a firm with a current ratio of less than 1.00 frequently lacks the capital to fulfill those obligations, whereas a company with a current ratio of more than 1.00 typically has the financial resources to cover all its short-term obligations. This tells us that Apex and ARC are in good shape to do that,
but ISDR is not because their current ratio is at .302.
Long-Term Debt to Equity Ratio
Next, we assessed the long-term debt to equity ratio of all three companies. This will tell us how much debt, as opposed to its own resources, a company is using to fund its activities (Fernando, 2022). This can be calculated by taking the long-term liabilities and dividing by stockholder equity. Apex’s long-term debt to equity ratio for 2013 was .650 and for 2012 it was
Unit 2 IP 3
1.580. For Issuer Direct Corporation, it was .058 for the year 2022 and .058 for the year 2021. For Arc, it was .508 for the year 2022 and .587 for the year 2021. What the long-term debt to equity ratio tells us is if its high, the company is using debt to fund its expansion. If it is low, or close to zero, it means the company is not relying on debt to fund its operations. This could be good or bad. If it is high, the company is using too much debt to finance its operations. However,
if it is low that would usually mean that it is wonderful because the company is not in a lot of debt, but it might make the potential investors see that the company does not realize its potential or the profits it can reach. After comparing all three companies, I strongly believe Apex is in the best shape when it comes to the long-term debt to equity ratio because it is around 1. ISDR and ARC are both close to zero. Gross Margin Percentage
The gross profit margin reveals how much money your company made after paying its
direct operating expenses. This can be calculated by taking the gross profit and dividing it by the
total revenue. For a business to be financially sufficient, you want the revenues to cover the
production costs otherwise you will be losing money to make your product. We have Apex’s
gross margin at 22% for the year 2013 and 16% for the year 2012. For ISDR, we have the gross
margin at 76% for the year 2022 and 74% for the year 2021. For ARC, we have the gross margin
at 34% for the year 2022 and 32% for the year 2021. If we are just looking at the gross margin
percentage, it does make ISDR look like they are making the most money after paying off what it
cost to make the product. Apex and ARC are in the 20’s and 30’s and ISDR is in the 70’s. You
have to take all the categories into consideration because even though ISDR’s percent margin is
the highest, their revenue is the lowest.
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Unit 2 IP 4
Net Profit Margin Percentage
A company's net profit margin shows how much of each dollar in revenue it receives is
converted into profit (CFI Team, 2022). This can be calculated by taking the net income and
dividing it by the revenue. Apex’s net profit margin is at 5% for the year 2013 and 1% for 2012.
This means theirs increased as time goes even though it is only at 5%. ISDR’s net profit margin
is at 8% for 2022 and 15% for 2021. This means their decreased by more than half as time went.
They are still at the highest with the 8% but it did drop drastically. For ARC’s net profit margin,
we have 4% for the year 2022 and 3% for the year 2021. I would say Apex is in pretty good
shape when it comes to this category because they had good solid growth. Return on Equity Percentage
Return on Equity (ROE) determines a company's profitability in relation to stockholders'
equity. The higher the ROE, the better the management team is at generating income and growth
from its equity financing the higher the ROE (Fuhrmann, 2022). We can calculate the ROE by
taking the net income and dividing it by the stockholder equity. For Apex, we have 29% for 2013
and 5%5 for 2012. For ISDR we have 6% and for 2021 we have 10%. For ARC, we have 7% for
the year 2022 and 6% for the year 2021. Between the two years, ISDR’s dropped a few
percentages and ARC’s increased by 1% but Apex’s skyrocketed from a 5% to 29% so I would
say Apex is in the best shape and constantly growing.
Conclusion
In conclusion, we have conducted a comparative analysis of the companies Apex Printing, Issuer Direct Corporation (ISDR) and ARC Document Solutions (ARC). We have examined the depth of categories such as the current ratio, long-term debt to equity ratio, gross
Unit 2 IP 5
margin percentage, net profit margin percentage and the return on equity percentage. We were able to see which company is in better shape at each of these categories. I have attached the attachment of the ratio’s, as well as listed them below.
Unit 2 IP 6
References
CFI Team. (2022, November 26). Net Profit Margin
. Corporate Finance Institute. https://corporatefinanceinstitute.com/resources/accounting/net-profit-margin-formula/
Fernando, J. (2022, August 10). Debt-to-Equity (D/E) Ratio Formula and How to Interpret It
. Investopedia. https://www.investopedia.com/terms/d/debtequityratio.asp
Fernando, J. (2023). Current Ratio Explained With Formula and Examples
. Investopedia. https://www.investopedia.com/terms/c/currentratio.asp
Fuhrmann, R. (2022, July 3). How to Calculate Return on Equity (ROE)
. Investopedia. https://www.investopedia.com/ask/answers/070914/how-do-you-calculate-return-equity-
roe.asp
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Cost-Volume-Profit Analysis
Help
40
The Effect Of Prepaid Taxes On Assets
And Liabili...
O
13. Goodwill can be recorded
a. When customers keep returning because they are satisfied with the company's products.
b. When the company acquires a good location for its business.
c. When the company has exceptional management.
d.
Only when there is an exchange transaction involving the purchase of an entire
business.
Debenture Valuation
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