Unit 2 IP

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Colorado Technical University *

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Finance

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Jan 9, 2024

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Kevin Hemstreet Unit 2 Individual Project Colorado Technical University June 23, 2023
Computation Table Ratio Apex Printing Issuer Direct Corp Quad/Graphics Current Ratio 1.13 0.302 0.88 Debt-to-Equity Ratio 0.86 0.996 2.16 Gross Margin Percentage 28.00% 75.8% 37.4% Net Profit Margin 5.83% 9.9% 1.2% Return on Equity 31.34% 6.1% 1.8% Explanation and Computation Apex Printing has exhibited both positive and negative trends in its financial ratios. The positive trends include a current ratio of 1.13, indicating a moderate ability to meet short-term obligations. Additionally, the debt-to-equity ratio of 0.86 suggests a lower level of debt relative to equity, indicating a conservative capital structure. The company's gross margin percentage of 28.00% demonstrates a reasonable profit margin after deducting the cost of goods sold. Furthermore, Apex Printing has achieved a strong return on equity of 31.34%, indicating favorable profitability from shareholders' investments. On the negative side, the net profit margin of 5.83% reflects a moderate level of profitability. Issuer Direct Corp, on the other hand, faces some challenges in its financial ratios. The current ratio of 0.302 indicates a lower liquidity position, which could potentially hinder its ability to meet short-term obligations. The debt-to-equity ratio of 0.996, while still relatively low, suggests a higher level of debt compared to equity. However, Issuer Direct Corp showcases a strong gross margin percentage of 75.8%, indicating better profitability after deducting the cost of goods sold.
The net profit margin of 9.9% reflects a higher level of profitability, outperforming Apex Printing in this regard. However, the return on equity of 6.1% is relatively lower, suggesting lower profitability compared to its shareholders' equity investment. Quad/Graphics also exhibits a mix of positive and negative trends in its financial ratios. The company has a current ratio of 0.88, which indicates a relatively stronger liquidity position compared to Issuer Direct Corp. However, the debt-to-equity ratio of 2.16 points to a higher proportion of debt financing compared to equity, potentially indicating higher financial risk. The gross margin percentage of 37.4% falls between Apex Printing and Issuer Direct Corp, suggesting a moderate level of profitability. Unfortunately, Quad/Graphics has the lowest net profit margin of 1.2%, indicating relatively lower profitability compared to both Apex Printing and Issuer Direct Corp. The return on equity is also the lowest at 1.8%, implying lower profitability from shareholders' investments. Comparing Apex with Industry Peers When looking at Apex’s ratios with those of its industry peers we can see certain trends. In terms of the current ratio, Apex Printing has a ratio of 1.13, which indicates its ability to meet short- term obligations. Compared to Issuer Direct Corp's lower current ratio of 0.302 and Quad/Graphics' ratio of 0.88, Apex Printing demonstrates a stronger liquidity position. Looking at the debt-to-equity ratio, Apex Printing has a ratio of 0.86, suggesting a conservative capital structure with a lower level of debt relative to equity. In comparison, Issuer Direct Corp has a ratio of 0.996, indicating a similar conservative financial leverage position. However, Quad/Graphics has a higher ratio of 2.16, suggesting a higher level of debt relative to equity. Apex Printing and Issuer Direct Corp exhibit stronger financial leverage positions compared to Quad/Graphics. In terms of gross margin percentage, Apex Printing's ratio of 28.00% indicates a reasonable profit margin after deducting the cost of goods sold. In comparison, Issuer Direct Corp shows a higher gross margin percentage of 75.8%, suggesting stronger profitability in this aspect. Quad/Graphics, on the other hand, has a lower gross margin percentage of 37.4%. Moving on to the net profit margin percentage, Apex Printing has a ratio of 5.83%, indicating its profitability after considering all expenses and taxes. In comparison, Issuer Direct Corp demonstrates a higher net profit margin percentage of 9.9%, suggesting stronger profitability. Quad/Graphics, however, has a lower net profit margin percentage of 1.2%. Lastly, looking at the return on equity (ROE), Apex Printing has an ROE of 31.34%, showcasing the profitability generated from shareholders' investments. In comparison, Issuer Direct Corp has a lower ROE of 6.1%, while Quad/Graphics has an even lower ROE of 1.8%. Apex Printing demonstrates a higher return on equity compared to both Issuer Direct Corp and Quad/Graphics. Overall, when comparing Apex Printing's ratios with its industry peers, it shows positive trends in terms of liquidity, financial leverage, and return on equity. However, Issuer Direct Corp outperforms Apex Printing in terms of gross margin percentage and net profit margin percentage, indicating stronger profitability. Quad/Graphics, on the other hand, lags behind in several ratios,
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suggesting potential areas for improvement. Investors would likely find Apex Printing's financial analysis competitive compared to both Issuer Direct Corp and Quad/Graphics, considering its favorable liquidity position, conservative financial leverage, and higher profitability metrics. When considering factors such as higher or lower ratios, consistency, and changes over time, Apex Printing compares favorably to its industry peers, Issuer Direct Corp and Quad/Graphics. Apex Printing shows stronger liquidity, lower financial leverage, higher profitability, and a superior return on equity. The company's ratios have remained consistent over time, indicating a stable financial performance. Additionally, positive trends and improvements in the ratios suggest a favorable trajectory for Apex Printing. Overall, investors would find Apex's financial analysis competitive compared to its rivals in the sector, but it's important to conduct a thorough analysis considering other relevant factors and industry dynamics. Considering Different Factors Based on the analysis of Apex Printing's financial ratios compared to its industry peers, Issuer Direct Corp and Quad/Graphics, investors would likely find Apex's financial analysis competitive in the sector. Apex demonstrates stronger liquidity with a higher current ratio, lower financial leverage with a lower debt-to-equity ratio, and higher profitability with a higher gross margin percentage, net profit margin percentage, and return on equity percentage. These positive trends, along with the consistency of the ratios over time, indicate a stable financial performance for Apex Printing. References Form 10-K . Inline XBRL Viewer. (n.d.). https://www.sec.gov/ix?doc=%2FArchives%2Fedgar %2Fdata%2F0000843006%2F000165495423002330%2Fisdr_10k.htm#i8 Form 10-K . Inline XBRL Viewer. (n.d.-a). https://www.sec.gov/ix?doc=%2FArchives%2Fedgar %2Fdata%2F0001481792%2F000148179223000012%2Fquad- 20221231.htm#if4c1209a0d084294a2fdc3741d4bd79c_250 Quad/Graphics Inc. (2023). (). Fort Mill: Mergent. Retrieved from Business Market Research Collection https://coloradotech.idm.oclc.org/login? url=https://www.proquest.com/reports/quad-graphics-inc/docview/1860775706/se-2