Application - Research Paper Example

Profile of the Company Aramex Inc is a United Arab Emirates-based public company and deals with provision of consumers’ related services based on freight, express logistics and supply chain management of businesses. The company has been under private ownership since 2002 and operates comprehensive problems on transportation and logistics. Aramex Inc. presents one of the most prominent companies within Middle-East since its listing in international stock exchange in mid 1990s (Aramex Inc, 2014).

Aramex’s transportation network covers wide region from Middle-East to United Kingdom through to Caribbean countries. The company undertakes services from receiving shipments from defined points to taking charge of all clearance procedures upto the delivery points. Aramex Inc (2014) provides different modes of transportation such as air-sea, air-land and supposedly sea-land depending on customer requirements. Classification of the types of expenses associated with Aramex Inc The financial statement analysis presents consolidated financial statements of Aramex Inc and its subsidiaries.

Presentation of consolidated financial position and review of consolidated statement of cash flows, comprehensive income statement and balance sheet is on quarterly basis. Expenses as per the company can be categorized as under administrative expenses and operating expenses (Market Publishers, 2014). Administrative expenses include:Salaries and benefitsRent DepreciationCommunication expensesRepairs and maintenance Travel expenses Allowance for impairment of receivablesUtilitiesPrinting and stationaryEntertainment Insurance and securityGovernment fees and taxesCorporate social responsibilitySponsorship and othersOperating expenses include:Sales and marketing expenses Vehicle running and maintenanceSuppliesCommunication expensesDepreciationRent Review of the income statement and balance sheet of Aramex Inc Review of financial statement includes calculation of differents financial ratios.

Financial ratios based on the balance sheet focuses on current asset and current liability as shown within the company’s balance sheet. The financial ratios include Working Capital, Current Ratio and Quick Ratio (Market Publishers, 2014).. Table 1: Aramex Inc Financial Ratios Financial Ratios 31/03/201431/12/2013EPS0.20.19Book value1.511.46Close Price3.373.11P/E16.8216.01P/B2.242.13Return On Assets9.429.31Return On Equity13.313.3Gross Profit Margin54.3154.18Net Profit Margin8.528.36Equity/Assets70.

870Borrowing 3.864.29Leverage39.8641.1Current Ratio2.312.22Quick RatioN/AN/ADebt/Equity5.456.13Liquid Assets/Total AssetsN/AN/A According to Aramex Inc financial statement, the current ratio for the company is 2.31 and this indicates the liquidity position of the company. Current ratio indicates the relationship existing between current assets and current liabilities. For satisfactory liquidity position the ratio should exceed 2:1, therefore there is strong liquidity position within the firm since the ratio exceeds two.

However, the company gives no detail concerning Quick Ratio due to lack of detail inventory making current ratio to serve same purposes as Quick ratio. This is an indication on the fact that short-term solvency of the firm in high and eligible. The Cash Ratio for indicates soundness of the firm showing that the company currently has enough cash at hand making it possible for management to meet current obligations (Market Publishers, 2014). From the financial statement analysis, Debt management ratios include; Debt Ratio, Debt-Equity Ratio and Equity Multiplier.

Aramex Inc operates on some debts making this ratio crucial part of analysis. Total debt as per financial records stands at 13,945 AED with capital employed being 1623798, making debt ratio to be 0.0085878. Therefore, financial lenders have a stake within the company through financing part of the net assets. Debt-Equity Ratio shows some significant figure showing that lenders contributed some percentage per each unit of owner’s total contributions. On profitability ratios, Gross Profit Margin for the company that is 0.

5431 reveals that the firm’s management is capable of running the company’s production process with 54.31% level of efficiency. Net Profit Margin shows that the firm is still operating below average in achieving net profit that stands at only 8.52%. Operating expenses ratio reveals that the company’s 21.05% of sales is used on cost of goods sold including selling, marketing and other operating expenses. The Return on Equity shows that the firm operates on owner’s resources with 13% efficiency (Market Publishers, 2014).

Overall initial impression of the company based on the financial data The analysis reveals that Aramex Inc has the ability of making more profits at gross profit level despite average net profit. The net profit seems low owing to debts to be settled and tax payments. Existence of numerous operating expenses makes profits negligible. In Asset Management Ratios, there is average generation of sales from available assets. Despite the firm generating profits, much is used in administrative and operation expenses.

This might hinder growth process since such expenses would prevent yielding of proper results. ReferencesAramex Inc (2014). Products and services. PDF file. Retrieved fromhttp://www.aramex.com/Market Publishers. (2014). Aramex PJSC Fundamental Company Report Including Financial, SWOT,Competitors and Industry Analysis. Retrieved from http://www.marketpublishers.com/