FINACIAL RATIO ANALYSIS
- Liquidity Ratio
LR= Current Assets / Current Liabilities= 465,8/510,2=0,91
Liquidity Ratio is under 1 which indicates that for every $1 of CL there is $0,91 of CA. This mean that the company is managing its short term obligations not well.It suggests that the company would be unable to pay off its obligations if they came due at that point and for a creditor this value would be not satisfactory.
- Return on Assets
ROA = Net Income/ Total assets = (286,5)/ 939,5= (0,304)
It means that for every one dollar of assets the company yields a loss of 0,304 dollar. It is exactly a bad sign , though ROA (2002) is higher than ROA (2001).
- Return on equity
ROE = Net Income / Total stockholder ‘s equity = (286,5)/(1640,8)=(0,1746)
It means that The per dollar loss for every stockholder s’ equity amount up to 17,46 which again is seriously bad sign as it ‘s not giving the investors/owners any attraction to keep the shares.
SPACE MATRIX ANALYST
I. Financial Strength
1. Net Income ( 1 pt )
Within 3 years from 2000 to 2002, the net income of Revlon is very very bad. During this period, their net income is continuous negative. They continuously loss in 3 years with a growing amount. The reason is the company continues its restructuring program that was started in 1998.
2. Operating income ( 1pt)
Revlon's operating income in 2000 and 2001 2 remain very high ($ 15.9 million in 2000 and $ 16.1 million in 2001). However, by the end of 2002 their operating income has declined dramatically. Within one year it had dropped to $ 114.9 million. Operating income was Became operating loss.
3. Liquidity (2pt)
Liquidity of Revlon is quite low. Liquidity ratio is 0,91 , that point is not satisfactory for the creditors.
4. Return on Assets. (1pt)
Compare with some competitors such as Avon , Unilever , Estee Lauder , Ravlon ‘s ROA is too low.
| Ravlon | Unilever | Avon | Estee Lauder |
ROA | -0,304 | 0,035 | 0,14 | 0,095 |
It shows that...