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Benchmark-Financial Analysis Financial Analysis Robin Jenkins Grand Canyon University January 28, 2024

BENCHMARK-FINANACIAL ANALYSIS Financial Analysis When looking at Martha Stewart Living Omnimedia you can see that it is not what it used to be. It was once a company that was worth over a billionaire dollars and only sold for $175 million in 2019. There are many things that lead to business not doing as well as it once did. The ratios that can be looked at to determine the financial status are profitability, liquidity, leverage, activity, and shareholder’s return ratio. This report will look at the ratios, shareholders’ return and activity, and the operational and organizational plans. To understand Martha Stewart Livings Financial Analysis, it is important to understand the company. First, we can look at the profitability ratio. Profitability can be calculated by looking at the return on assets. This showed that Martha Stewart Living had a decline from 2014 of 57% which does not look good. Next liquidity can be looked at. Liquidity can be looked at as the quick ratio, operating cash flow ratio, and current ration (Hayes, 2021). Martha Stewart Living had a ratio of 2.22 in 2014. Further looking at this it shows that they would need to improve in their liquidity area to continue to grow. Ratio Category Ratio Name Formula Year 2014 Profitability Ratio Return on total assets Profits after taxes Total Assets 57.0% Liquidity Ratio Current Ratio Current Assets/Current Liabilities 2.22 Leverage Ratio Debt-to- Assets Total Debt / Total Assets 0% Activity Ratio Total Assets Turnover Sales/ Total Assets 6.0 Shareholder’s Return Ratio Dividend Yield on Common Stock Annual Dividend per Share/ Current Market Price per Share 0.8%

BENCHMARK-FINANACIAL ANALYSIS When reviewing the activity ratios, it shows that in 2014 it was at 6%. Martha Stweart Living has a negative profit margin and net income. This is something that will have to be closely monitored and watched. Organizational /Operational Plans When looking at Martha Stewart Living Omnimedia it is without a doubt in their best interest to focus on long-term plans. They need to pay off any short-term obligations by using its current assets. I think a risk involved with forming a strategic alliance would be the misalignment of goals. This brand is looked at being set in their ways and not being modernized so, to have someone come in and look at what could help them could make them clash over goals. It is hard to study and look at the ratios being the company having sold multiple times but, when looking at an alliance this all needs to be looked at. An alliance would need to understand not only the positives but also the negatives. Capitals for Finances How the economy sits today in a state of volatility and uncertainty it will be harder to get funding from investors and banks. They could try for a loan or grant. Places will be looking at their financial health, creditworthiness, market conditions, and investors. Martha Stewart Living is such a well-known company it could potentially attract investors and certain lenders. The way the financial climate is right now could however possibly affect the cost of capital. Some things that can affect this is economic downturns and tighter credit markets. If Martha Stewart produces a solid record, it could help this. A realistic interest rate if a company borrows money how everything is now 6%-12%. If they do borrow it will affect the quick and current ratio. Different ways they can gain capital are by equity financing, debt financing, retained earnings, asset sales, and joint ventures (Hitt, Ireland, & Hoskisson, 2017). If they were to issue new shares by stock

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BENCHMARK-FINANACIAL ANALYSIS this would allow them to gain funds without the debt. It does have a drawback however it will narrow shareholders ownership and may affect the management by limiting their control. They could possibly borrow from banks, bonds, or other ways. They could gain capital fast this way, but it would increase their leverage and interest. What if they used their retained earnings? If they have enough retained earnings, they may use these and not rely on external sources. Martha Stewart Living could join joint ventures and share the risks and burdens while gaining and mitigating burdens. They could even sell off unused assets, allocating these funds to where they would benefit them. When looking at ratios it would affect the most it would be liquidity ratios. The current ratio will be affected because they will be increasing their current assets. When acquiring too much debt it could affect their credit. It will also affect their quick ratio. In conclusion if they keep the correct business plan in place and monitor their ratios, organizational and operational plans, and if they do acquire capital weigh all pros and cons, they could improve. There is a call for concern if the company does not bend with the times and do what is best for them. This company made Martha Stewart a billionaire and with the right people running it can be great again.

BENCHMARK-FINANACIAL ANALYSIS

BENCHMARK-FINANACIAL ANALYSIS References Hayes, A., (2021). Liquidity Ratio Definition.Investopedia. Retrieved fromhttps://www.investopedia.com/terms/l/liquidityratios.as Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2017). Strategic management: Competitiveness and globalization: Concepts and cases (12th ed.). Boston, MA: Cengage Learning. ISBN- 13: 9781305502147

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