Is It Worth Investing in Young - Essay Example

The company produces high-quality products at the lowest price possible. Such a good reputation has created a moat around the company’s business thus allowing it to keep its competitors at bay thereby enabling it to enjoy profits and growth. The competitive advantage will make the company reward its shareholders very well for decades thus making it a good investment. The good reputation has provided the company with a real opportunity to expand in the future hence a good investment. Such conditions make Youngs have higher future financial performance hence being able to provide the highest financial rewards to the investors or shareholders.

Secondly, Youngs has increased profitability and liquidity. The current ratio of Youngs shows an upward trend and the trend is likely to continue into the future, this indicates an increase in its ability to meet short-term obligations. On the other hand, its profitability ratios show an upward trend. The net profit ratio of the company increased in 2014 sop is the return on assets. This implies an increase in the company’s efficiency.  The company is therefore very profitable and the trend is likely to continue into the unforeseeable future. Even though the company has an increasing use of debts, it has sufficient liquidity to meet its interest payments.

Its cash flow in terms of interest payment is, therefore, limited hence the company is able to keep such costs to a minimum. The lower interest payments leave more cash at the disposal of the company which they can use as financial rewards to the investors in terms of dividends. In addition, the surplus cash can be reinvested into the company to generate or create value for the shareholders of the company. In either way, the investors stand to benefit.