Module One Spreadsheet (Fixed)

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Southern New Hampshire University *

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FIN 550

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Finance

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Jan 9, 2024

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RATIO ANALYSIS Note: change the column names to your industry and selected companies RATIOS Oil & Gas Chevron (CVX) Profitability Ratios (%) Gross Margin 48% 40.22% EBITDA Margin 17.67% 24.83% Operating Margin 20.12% 30.07% Pre-Tax Margin 12.90% 16.16% Effective Tax Rate 0% 24.98% Financial Strength Quick Ratio 0.19 0.38 Current Ratio 1.08 1.42 LT Debt to Equity 0 0.13 Total Debt to Equity 0.07 0.14 Interest Coverage 16.36 110.61 Valuation Ratios Price/Earnings Ratio 8.97 10.75 Price to Sales P/S 0.81 1.29 Price to Book P/B 1.82 1.63 Free Cash Flow per Share 4.64 7.69 Management Effectiveness (%) Return On Assets 10.81% 8.41% Return On Investment 12.23% 11.33% Return On Equity 20.62% 15.81% Efficiency
Receivable Turnover 11.63 10.41 Inventory Turnover 10.65 13.89 Total Asset Turnover 1.19 0.69 Free Cash Flow/Net Income 36.56 35.69 What is Ratio Analysis? Briefly explain and cite your resources: The texctbook explains that ratio analysis are the comparison is doing based on the analysis of various componentsof the company to determine how w shareholder's equity. Financial Strength ratios tell you how likely a company is to pay its de money into the company. Management Effectiveness ratios show income compared to the August 23). 21 financial ratios explained: Formulas & Examples. SoFi. https://www.so Based on the ratio analysis above, in which company would you be willing to invest and wh on the analysis performed I have discovered that while PBF has it's areas of over performin industry in most cases. Their biggest weakness is in Efficiency and management effectiven Ehrhardt, M. C., & Brigham, E. F. (2023). Corporate Finance: A Focused Approach (7th ed.). and Co’s effective tax rate by quarter. CSIMarket. (n.d.). https://csimarket.com/stocks/sing
PBF Energy Inc (PBF 8.20% 11.35% 9.88% 6.65% 25.82% 0.39 1.39 0.24 0.23 53.69 1.91 0.13 0.77 2.46 22% 31% 49.06%
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28.63 12.64 3.05 -0.02 of various components of well they are doing as a who ebts and liabilities within a e company's assets. And fin ofi.com/learn/content/fina hy? ng compared to CVX, it is s ness but they are performin . Cengage Learning US. htt gleProfitabilityRatios.php?c
ANALYSIS CVX has a lower total debt to equity than the industry, but lower than PBF. Being higher than industry average and competition, CVX shows a stronger free cash flow ratio. CVX has a lower return on assets than PBF and the industry, which tells us it is making a lower profit per dollar of assets. While both companies are below the industry average, CVX is vastly overperforming compared to PBF's gross margin ratio. This means that CVX is better at retaining their capital per dollar of sales. CVX is performing higher than the industry and PBF with their EBITDA rations. This means that CVX is making a higher cash profit than the industry average and their competition. Again, CVX is ranking higher than both PBF and the industry average. Operating margin is the profit a company makes before interest so this tells us CVX is making a higher profit. The higher margin for Pre-Tax is CVX once again. As this is profit before taxes, again this means CVX is making a higher profit. Though there was no record for the industry for effective tax rate I could find, CVX clearly performs higher than PBF. This means CVX is paying a higher tax rate which reduces profit margin. Both companies are ranking higher than the industry in Quick Ratio. However, as they are all below 1.0 this means they may have to sell off inventory in order to pay off liabilities. Though close, CVX is just under PBF's performance in quick ratios. Both companies are above industry average. However, CVX shows to have more assets than PBF does. This does shows that CVX may have trouble paying their short term obligations within the span of a year. CVX has a higher long term debt to equity compared to both PBF. Again the industry average did not show a debt to equity ratio. Both businesses are higher than the industry average in Interest Cover. Howevber, CVX is higher than PBF in this category, which means it is at an advantage with interest coverage. CVX is just above industry average when it comes to how much investors are willing to pay per dollar of reported profits. They are also greatly overperforming compared to PBF. This ratio represents the price of company stock to revenues. JMP is a higher ratio than PBF and the industry average, which means their stock may be over valued. Comparing market value to book value, CVX has a higher ratio than PBF. However the market average is still higher than both. CVX is making a lower return on investements than both PBF and the industry. This means they are making a lower return than the cost of investment. Again, CVX is making a lower return than both PBF and the industry. They are making less profit compared to their common equity wheras PBF is overperfoming compared to the industry.
References Receivable turnover shows how easily a company is to collect on their receivables and it shows CVX's consumers are having a much easier time paying invoices than both industry and PBF. Being higher than both PBF and the industry average in Inventory Turnover tells us CVX is holding too much inventory and risks holding onto obsolete inventory more likely than both. CVX is outperforming in Total Asset Turnover compared to both ther industry and PBF. This means CVX is generating more business in asset investments. CVX performs just under the industry but above PBF with Free Cash Flow/Net Income. This means CVX is taking in more cash than PBF than what's beign earned in profits. the financial statements for a company. External and internal analysts gather and use to determine how well a company ole. Profitability ratios are how much a company is making in profit based on sales, balance sheets, operations, and a 12 month period. Valuation Ratios are are how much value the company has and how willing investors are to invest their nally, Efficiency ratios measure how thoroughly a company is using their assets and resources. Lake, R. (2023, ancial-ratios-list/ Based still the weaker company to invest in. CVX has shown a lot of potential in their profitability ratios even compared to the ng well with profits and receivables. If given the option I would most certainly invest in CVX over PBF. ttps://mbsdirect.vitalsource.com/books/9798214340821 JPMorgan Chase code=JPM&itx
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