The Ratio and Trend Analysis of a Company - Research Paper Example

Principles of Finance RESEARCH PROJECT Ratio and Trend Analysis 2/13 Table of Contents Table of Contents 2 Introduction 3 Ratio Analysis – Literature Review 4 Profitability Ratios 4 Profit Margin 4 Return on Assets 4 Return on Equity 5 Asset Utilization Ratios 5 Receivables Turnover (Peavler, 2010) 5 Average Collection Period (Peaveler, 2010) 5 Inventory Turnover Ratio (Peavler, 2010) 5 Fixed Asset Turnover Ratio (NIMS, 2010) 5 Total Assets Turnover (NIMS, 2010) 6 Liquidity (Solvency) Ratios 6 Current Ratio (NET MBA, 2007) 6 Quick Ratio (NET MBA, 2007) 6 Debt Utilization Ratios 6 Debt to total Assets 7 Times Interest Earned 7 Market Value Ratios 7 Price earnings Ratio (P/E Ratio) 7 Market-to-Book Ratio 7 Reynolds American Inc. 8 Income Statement (Reynolds American Inc, 2009, 2008) 8 Balance Sheet (Reynolds American Inc, 2009, 2008) 9 Financial Ratios Calculation 10 Analysis and Implications 11 Universal Corporation 12 Income Statement (Universal Corporation, 2009, 2008) 12 Balance Sheet (Universal Corporation, 2010) 13 Financial Ratios Calculation 15 Analysis and Implications 16 Industry Analysis and Comparison 17 Raising of Funds – Reynolds American Inc. 18 Capital Market 18 Bond Market 19 Decision Analysis 19 As a Banker 19 As an Investor 20 Bibliography 20 Introduction The current project deals with the ratio and trend analysis of a company. The Industry chosen is tobacco and tobacco products. The company chosen here is the Reynolds American Inc. in the report a detailed ratio analysis has been with the help of the information from the Income Statement as well as the Balance Sheet. Later on, the same has been compared with its competitor Universal Corporation. Both the companies are listed on the New York Stock Exchange. Further a comparison of both the companies has been done with that the of the industry standards. The sources for raising funds by the Reynolds American Inc has also been debated upon with a take on the company. Ratio Analysis – Literature Review To do the analysis about the current situation of the company a ratio analysis has been performed over the 3 years financial data of the companies. The various ratios that have been calculated are Profitability Ratios, Asset utilization Ratios, Liquidity (Solvency) Ratios, Debt Utilization Ratios and Market Value Ratios. We shall now discuss the various ratios in detail. Profitability Ratios These are the ratios which show the ability of a firm to earn profits (Profitability Ratios, 2010). It helps to calculate the profit earning capability of a company with respect to the sales, assets and other such expenses. The various ratios under this are: Profit Margin This calculates the amount of earnings for a company from every dollar of sales (Peaveler, 2010). This is calculated as net profit divided by the revenue or sales (Profitability Ratios, 2010). The higher the profit margin the better the company and its operations (Profitability Ratios, 2010). Return on Assets This ratio basically calculates the efficiency with which a firm uses its fixed assets to generate profits (Peaveler, 2010). This can be calculated by dividing the net profit by the total amount of fixed assets (Peaveler, 2010). The higher the ROA the better the company and its management are (Profitability Ratios, 2010). Return on Equity This ratio calculates the profit that a company is earning over the investment of shareholders (Peaveler, 2010). This can be calculated by dividing the net profit by the total shareholders equity of the firm (Peaveler, 2010). The higher the ROE the better the company is (Profitability Ratios, 2010). Asset Utilization Ratios These ratios tell the management how well they have been using their assets to generate sales (NIMS, 2010). They give valuable insight about the internal operations of the firm and thus the management could take the required steps to improve the same. The various ratios have been discussed hereunder: Receivables Turnover (Peavler, 2010) This ratio indicates as to how many times the accounts receivable are collected on an average. This can be calculated by dividing the net sales by the accounts receivable on any particular date. The higher the ratio is the better it is for the firm but too high a ratio gives the indication of a very conservative and restrictive policy. Average Collection Period (Peaveler, 2010) This is a simple calculation of the number of days a firm takes to collect its account receivable. This can be calculated by dividing the accounts receivable by the sales multiplied by 1/360. This is compared for each year and then an analysis is made about the liquidity of the receivables. Inventory Turnover Ratio (Peavler, 2010) This ratio shows how liquid is the inventory of the firm, i.e., the number of times the inventory held by the firm is rotated in a single year. This can be calculated by dividing the net sales by the current inventory level. A high turnover ratio is good for the company as it shows the liquidity of the inventory and its ability to sell. Fixed Asset Turnover Ratio (NIMS, 2010) This ratio shows the effective use of a firms fixed asset in order to generate sales. This can be calculated by dividing the net sales with the amount of fixed assets available with company. This ratio also says, the higher the better as this leads to a better management of the fixed assets of the firm. Total Assets Turnover (NIMS, 2010) As above, this ratio shows the effectiveness of a firm to use its total assets to generate sales. This is calculated by dividing the sales with the amount of total assets held by the firm. This is also better when it is higher. Liquidity (Solvency) Ratios These ratios determine the ability of a firm to meets its short term liabilities (Investopedia, 2010). This shows whether a firm could meets its short term obligations from the resources already available to it. The various ratios under this are: Current Ratio (NET MBA, 2007) This ratio determines the ability of a firm to meet its short term obligations. This can be calculated by dividing the current assets with the current liabilities. The lenders prefer the ratio to be more than one as they are ensured about the safety of their debt. If the ratio is below one then it is not good as there might be difficulty in meeting the obligations. Quick Ratio (NET MBA, 2007) The current ratio also includes inventory in current assets for calculation. However there might be certain inventory that may not be liquid. So, in order to determine the true ability to meet the obligations a new ratio called the quick ratio is calculated. This can be calculated by dividing the current assets less the inventory with the current liabilities. Debt Utilization Ratios These ratios calculate the credit worthiness of a company. These ratios also assist the credit rating agencies in determining t a suitable rating for the firm. These ratios also determine the extent to which a firm is using its debt. The various ratios under it are: Debt to total Assets This ratio determines the amount of debt covered by the available assets of the company. This ratio is used by the lenders before giving a loan as they can determine the safety of their money. This can be calculated by dividing the total long term debt of the company with that of the total assets available. Times Interest Earned This ratio determines how well a firm’s interests payment covered from the earnings are. The lenders here see whether there is a possibility that they might not receive their interest. This is calculated by dividing the interest expenses with that of the total profits. Market Value Ratios These ratios determine the outlook of the firms value in the market based upon the information in the company’s financial statements. The various ratios under this are: Price earnings Ratio (P/E Ratio) This ratio shows how much an investor is willing to pay per dollar of the earnings. This can be calculated by dividing the market price per share with the earnings per share. If the P/E ratio is high then it shows that the investor feel that the company has growth prospects in the future. Market-to-Book Ratio This ratio provides a relationship of the book value per share and the market value per share. This can be calculated by dividing the market price per share with the book value per share. A high ratio indicates that the management has been successful in creating value for its stockholders. Reynolds American Inc. Reynolds American Inc is the parent company of R.J. Reynolds Tobacco Company, American Snuff Company, LLC, Santa Fe Natural Tobacco Company, Inc. and Niconovum AB (Reynolds American Inc., 2010). The company is one of the largest manufacturer of tobacco products in the U.S. last year the company had a overall revenue of $ 8,377 million (Reynolds American Inc., 2010). The company is listed on the NYSE (NYSE, 2010). The financial statements of Reynolds have been shown below. Income Statement (Reynolds American Inc, 2009, 2008)     For the Years Ended   December 31, 2008 2007 2006         Net sales(1) $ 8,377 $ 8,516 $ 8,010 Net sales, related party 468 507 500         Net sales 8,845 9,023 8,510 Costs and expenses:       Cost of products sold(1)(2)(3) 4,863 4,960 4,803 Selling, general and administrative expenses 1,500 1,687 1,658 Amortization expense 22 23 28 Restructuring charge 90 - 1 Trademark impairment charge 318 65 90         Operating income 2,052 2,288 1,930 Interest and debt expense 275 338 270 Interest income (60) (134) (136) Gain on termination of joint venture (328) - - Other (income) expense, net 37 11 (13)   Income from continuing operations before income taxes and       extraordinary item 2,128 2,073 1,809 Provision for income taxes 790 766 673         Income from continuing operations before extraordinary item 1,338 1,307 1,136 Extraordinary item - gain on acquisition - 1 74         Net income $ 1,338 $ 1,308 $ 1,210         Basic income per share:       Income from continuing operations before extraordinary item $ 4.58 $ 4.44 $ 3.85 Extraordinary item - - 0.25         Net income $ 4.58 $ 4.44 $ 4.10         Diluted income per share:       Income from continuing operations before extraordinary item $ 4.57 $ 4.43 $ 3.85 Extraordinary item - - 0.25         Net income $ 4.57 $ 4.43 $ 4.10         Dividends declared per share $ 3.40 $ 3.20 $ 2.75 Balance Sheet (Reynolds American Inc, 2009, 2008)   December 31, 2008 2007 2006 Assets       Current assets:       Cash and cash equivalents $ 2,578 $ 2,215 $ 1,433 Short-term investments 23 377 1,293 Accounts receivable, net of allowance (2008 - $1; 2007 - $1) 84 73 107 Accounts receivable, related party 91 80 62 Notes receivable 35 1 1,155 Other receivables 37 25 793 Inventories 1,170 1,196 - Deferred income taxes, net 838 845 92 Prepaid expenses and other 163 180           Total current assets 5,019 4,992 4,935 Property, plant and equipment, at cost:       Land and land improvements 95 96 97 Buildings and leasehold improvements 692 682 675 Machinery and equipment 1,756 1,738 1,689 Construction-in-process 37 74 50         Total property, plant and equipment 2,580 2,590 2,511 Less accumulated depreciation 1,549 1,517 1,449         Property, plant and equipment, net 1,031 1,073 1,062 Trademarks and other intangible assets, net of accumulated       amortization (2008 - $619; 2007 - $597) 3,270 3,609 3,479 Goodwill 8,174 8,174 8,175 Other assets and deferred charges 660 781 312           $ 18,154 $ 18,629 $ 18,178         Liabilities and shareholders equity       Current liabilities:       Accounts payable $ 206 $ 218 $ 275 Tobacco settlement accruals 2,321 2,449 2,237 Due to related party 3 7 9 Deferred revenue, related party 50 35 62 Current maturities of long-term debt 200 - 344 Other current liabilities 1,143 1,194 1,165         Total current liabilities 3,923 3,903 4,092 Long-term debt (less current maturities) 4,486 4,515 4,389 Deferred income taxes, net 282 1,184 1,167 Long-term retirement benefits (less current portion) 2,836 1,167 1,227 Other noncurrent liabilities 390 394 260 Commitments and contingencies: 11,917 11,163 11,135 Shareholders equity:       Common stock (shares issued: 2008 - 291,450,762; 2007 -       295,007,327) - - - Paid-in capital 8,463 8,653 8,702 Accumulated deficit (531) (873) (1,241) Accumulated other comprehensive loss - (Defined benefit pension       and post-retirement plans: 2008 - $(1,643) and 2007 - $(306),       net of tax) (1,695) (314) (418)         Total shareholders equity 6,237,000 7,466,000 7,043,000           $ 18,154 $ 18,629 $ 18,178 Financial Ratios Calculation   2008 2007 2006 Profitability Ratios       Profit Margin 15.97% 15.36% 15.11% Return on Assets (ROA) 7.37% 7.02% 6.66% Return on Equity (ROE) 0.02% 0.02% 0.02%         Asset Utilization Ratios       Receivables Turnover 35.81 50.41 4.02 Average Collection Period 10.05 7.14 89.56 Inventory Turnover 7.56 7.54   Fixed Asset Turnover 0.67 0.66 0.64 Total Asset Turnover 0.49 0.48 0.47         Liquidity (Solvency) Ratios       Current Ratio 1.28 1.28 1.21 Quick Ratio 0.98 0.97 1.21         Debt Utilization Ratios       Debt to Total Assets 65.64% 59.92% 61.26% Times Interest Earned 5.52 4.74 4.61         Market Value Ratios       P/E Ratio 11.29 16.19 16.36 Market-to-Book Ratio 2.42 2.83 2.81 Analysis and Implications The above ratios show that the company is very healthy. They have a profit margin of almost 16% and it has been increasing over the years. This shows that the company is getting more and more effective in its management. All the profitability ratios show that the company’s performance has been increasing. However the ROE has remained constant over the years. The reason for this could be that though the profits are increasing the firm has been continually retiring the equity. This also gives us a hint that the firm has a strong cash position and the future prospects to earn money is also expected to be strong. The asset utilization ratios have also improved over the period. As can be seen the receivables turnover and the collection period both show that the firm has become more conservative and restrictive in its credit policies. This might have impacted the sales of the company as the net sales have dropped from the previous year. The company is gaining effectiveness in using its assets, fixed as well as other, but very marginally. Still the assets seem to be under utilized as the ratios are below one. This could be improved in the future. If these are not improved then the company might have to face high costs for production. The liquidity ratio shows that the company is highly liquid thus ensure the safety of short term lenders. They have remained fairly constant but the quick ratio has been dropping which implies that the firm has an increase in the inventory levels. If this continues then the firms resources might blocked in illiquid inventory and thus make it difficult for it to meet its short term debt obligations. The debt utilization ratios show that the company is under leveraged. This depicts that the investors might not be happy about it. The company is doing business on the investors’ money. Under leveraging also reduces the profitability of a firm. Due to being under leveraged the firm might have a good credit rating and also the lenders would be willing to give a loan. But they need to do something to get adequate leveraging level. They also have a good interest coverage ratio and it has been increasing over time. This also shows that the firm has been paying off its debt and so the interest expenses are reducing overtime. But this again reduces the leverage applied by Reynolds. The market value ratios do not show a good picture of the firm. The P/E ratio has been decreasing drastically. This implies that the market values of shares are also dropping. One of the reasons could be that the investors are not keen on investing in tobacco firms as they are considered to be anti-social and the government has been heavily advertising against tobacco use. These events might have led to a feeling among the investors that the firm does not have a very bright future. Same is the story of the market-to-book ratio. It is also decreasing overtime. This has made the company to retire the stocks in order to gain some stability in the market price. The financials of Reynolds American Inc are very good in terms of performance. But the market value has been dropping very fast. The company needs to give out a message of a bright future to its investors to gain some momentum. The decreasing market value not only discourages the investors to invest in the company but also frightens the lenders to lend. This is a serious issue and must be dealt immediately. Universal Corporation Situated in US, Universal Corporation is a leading tobacco leaf company (Universal Corporation, 2010). It has operations in 30 countries. The company is listed on NYSE. The financial statements of the company are shown below. Income Statement (Universal Corporation, 2009, 2008)     For the Years Ended     December 31,   2008 2007 2006         Sales and other operating revenues $2,145,822 $2,007,272 $1,781,312         Costs and expenses       Cost of goods sold 1,715,724 1,563,522 1,412,209 Selling, general and administrative expenses 225,670 249,269 252,376 Restructuring and impairment costs 12,915 30,890 57,463         Operating income 191,513 163,591 59,264 Equity in pretax earnings of unconsolidated 13,500 14,235 14,140 affiliates       Interest income 17,178 10,845 2,056 Interest expense 41,908 53,794 60,787         Income before income taxes and other items 180,283 134,877 14,673 Income taxes 63,799 61,126 21,933 Minority interests, net of income taxes (2,817) (6,660) (4,287)         Income (loss) from continuing operations 119,301 80,411 (2,973)         Income (loss) from discontinued operations, (145) (36,059) 10,913 net of income taxes               Net income 119,156 44,352 7,940         Dividends on convertible perpetual preferred (14,850) (14,685)   Stock               Earnings available to common shareholders $104,306 $29,667 $7,940         Earnings (loss) per common share:       Basic:       From continuing operations $3.83 $2.53 ($0.12) From discontinued operations (0.01) (1.39) 0.43         Net income $3.82 $1.14 $0.31         Diluted:       From continuing operations $3.71 $2.52 ($0.12) From discontinued operations (0.01) (1.39) 0.43         Net income $3.70 $1.13 $0.31 Balance Sheet (Universal Corporation, 2010)   December 31,   2008.00 2007.00 2006.00 ASSETS               Current assets       Cash and cash equivalents $186,070 $358,236 $62,486 Short-term investments 58,889     Accounts receivable, net 231,107 261,106 212,639 Advances to suppliers, net 149,376 113,396 119,131 Accounts receivable unconsolidated affiliates 43,718 37,290 16,675 Inventories at lower of cost or market:       Tobacco 602,945 595,901 666,708 Other 42,562 40,577 42,746 Prepaid income taxes 17,696 8,760 7,351 Deferred income taxes 22,737 25,182 22,078 Other current assets 61,960 62,480 47,338 Current assets of discontinued operations   42,437 609,028         Total current assets 1,417,060 1,545,365 1,806,180         Property, plant and equipment       Land 16,460 16,640 16,796 Buildings 254,737 241,410 252,148 Machinery and equipment 519,695 512,586 537,343           790,892 770,636 806,287 Less accumulated depreciation (456,059) (410,478) (394,830)           334,833 360,158 411,457         Other assets       Goodwill and other intangibles 106,647 104,284 105,802 Investments in unconsolidated affiliates 116,185 104,316 95,988 Deferred income taxes 49,632 81,003 85,994 Other noncurrent assets 109,755 133,696 170,223 Non current assets of discontinued operations     217,020           382,219 423,299 675,027         Total assets $2,134,112 $2,328,822 $2,892,664 LIABILITIES AND SHAREHOLDERS EQUITY               Current liabilities       Notes payable and overdrafts $126,229 $131,159 $318,710 Accounts payable and accrued expenses 210,354 220,181 194,862 Accounts payable unconsolidated affiliates 10,343 644 2,727 Customer advances and deposits 21,030 133,608 98,750 Accrued compensation 25,484 18,519 16,996 Income taxes payable 8,886 11,549 3,129 Current portion of long-term obligations   164,000 8,537 Current liabilities of discontinued operations   13,314 285,418         Total current liabilities 402,326 692,974 929,129         Long-term obligations 402,942 398,952 762,201 Pensions and other postretirement benefits 88,278 100,004 100,414 Other long-term liabilities 84,958 70,528 68,373 Deferred income taxes 36,795 29,809 31,072       18,805 Total liabilities 1,015,299 1,292,267 1,909,994         Minority interests 3,182 5,822 17,799         Shareholders equity       Preferred stock:       Series A Junior Participating Preferred       Stock, no par value, 500,000 shares authorized,       none issued or outstanding       Series B 6.75% Convertible Perpetual Preferred 213,023 213,024 193,546 Stock, no par value, 5,000,000 shares authorized,       219,999 shares issued and outstanding       (220,000 at March 31, 2007)       Common stock, no par value, 100,000,000 206,436 176,453 120,618 shares authorized, 27,162,150 shares       issued and outstanding (26,948,599 at       March 31, 2007)       Retained earnings 711,655 682,232 697,987 Accumulated other comprehensive loss (15,483) (40,976) (47,280)         Total shareholders equity 1,115,631 1,030,733 964,871         Total liabilities and shareholders equity $2,134,112 $2,328,822 $2,892,664 Financial Ratios Calculation   2008 2007 2006 Profitability Ratios       Profit Margin 5.55% 2.21% 0.45% Return on Assets (ROA) 5.58% 1.90% 0.27% Return on Equity (ROE) 10.68% 4.30% 0.82%         Asset Utilization Ratios       Receivables Turnover 9.28 7.69 8.38 Average Collection Period 38.77 46.83 42.97 Inventory Turnover 3.32 3.15 2.51 Fixed Asset Turnover 2.99 2.56 1.64 Total Asset Turnover 1.01 0.86 0.62         Liquidity (Solvency) Ratios       Current Ratio 3.52 2.23 1.94 Quick Ratio 0.61 0.52 0.07         Debt Utilization Ratios       Debt to Total Assets 47.57% 55.49% 66.03% Times Interest Earned 4.57 3.04 0.97         Market Value Ratios       P/E Ratio 18.13 54.29 155.52 Market-to-Book Ratio 2.02 2.02 1.61 Analysis and Implications The ratios of Universal Corporation does not provide a very good picture about it. The profitability ratios are poor. The profit margin, ROA and ROE have been increasing over time but are still very low. This shows that the business has not been very good. They need to improve it further as these figures may not attract investors as well as lenders. The asset utilization ratios on the other hand provides good news. They have been very efficiently using the available resources. The asset turnovers are high showing good management in using them. The receivables turnover has been increasing which shows that the company has been stringent in collecting the debt. The liquidity ratios are also a bit troublesome. The current ratio is high and been increasing but the quick ratio is still very low though it has increased substantially over the period of three years. This shows that the level of inventory has been on a constant increase and also shows the low liquidity of the same. This might get the short term lenders a bit worried and make it difficult for the company to procure the same in the future. The company is highly under leveraged as shown by the debt utilization ratios. It has further reduced the debt over time. This might not make the investors happy as they would want the company to use the lenders money to do business and not their own. This also impacts the profitability of the firm. The firms’ market value has dropped phenomenally overtime. This high decrease implies that the market prices of shares have also dropped and the investors are losing faith in the company. The company must take some steps to recover from this or else they may find it hard to get investors and thus carry on the trade. Industry Analysis and Comparison Below are the some of the ratios for the US tobacco Industry. Return on Sales (%) Return on Assets (%) Return on Net Worth (%) Quick Ratio Current Ratio Inventory Turnover (x) Assets:Sales (%) Tot Liabilities:Net Worth (x) 11.70 8.75 30.42 0.81 1.52 10.49 1.34 3.48 Source: (BIZ Stats, 2010) The above ratios show that Reynolds is a leader in the market in terms of profitability. The profit margins are much higher than the industry average. However, they have not been doing good in terms of ROA and ROE. This implies that either they have invested a lot in assets than most other people in the industry or the management is highly inefficient in order to make the maximum possible utilization of the available resources. Reynolds is also better in terms of liquidity than the industry as a whole. Thus, it may have the confidence of its short term lenders. However, as previously mentioned their asset utilization ratio is very low and needs to be improved. This must have been a reason in their increase of costs. They are low on the leverage part and need to increase it in order to have better profitability prospects. But, overall they are the leaders. Universal on the other hand, is clearly a follower. It has very low profits than the industry average. This shows the inefficiency of the management to do good business. This also implies that they are not that good in sales and there is some problem with the company. However the short term liquidity is good for the company. This again shows that they have the confidence of the short term lenders and thus won’t face any problem in terms of working capital requirements. They have a low inventory turnover than the industry as a whole but their asset turnover ratio is double the industry. This shows that they a slow moving inventory but still they have managed to put their assets to a better utilization. They are also low on leverage than the industry and need to increase it in order to have better profitability prospects. But, overall they are followers. Raising of Funds – Reynolds American Inc. Reynolds needs to raise funds. The company has two options, either to raise funds in the capital market by issuing shares or through bond market through debt financing. We shall now analyze the two options based on the available information. Capital Market The firms’ market value ratios do not provide a very good picture about the firm. The ratios are low and have been decreasing overtime. This again implies that the market value of shares are dropping and that the people are losing faith in the company. The government has also been advertising against the use of tobacco which makes the firm even more undesirable for the investors. Reynolds have also been retiring their shares in an attempt to stabilize the market value. In such a condition, it would be unwise to issue shares as this would again dilute the market and reduce the market value further. Also the current situations make it difficult to attract investors. Hence, there is a high probability that the issue might fail. Bond Market The firms’ debt utilization ratios show that the firm is under leveraged. Raising money through the debt market will provide Reynolds a chance to improve the debt utilization ratios and hence better the leverage. The low leverage and high interest coverage also makes lending to the company favorable to the lenders. Also, raising debt will also bring back some confidence among the investors as the profitability will also increase. Also, raising money through debt is cheaper than cost of capital or raising money through selling of shares. The only problem that could arise is the doubt about the future of the company due to the negativity associated with tobacco consumption. But, since the profitability is good and also there enough assets to back the debt obligation, this is far more possible. Thus, it would be better to raise money through debt rather than selling of shares. Decision Analysis As a Banker Reynolds American Inc, is one of the leading company in the tobacco industry. It has shown great performance in the past. The profitability is good and also the debt is low. The company has a high interest coverage ratio. If they come to me for a loan, then looking at the financial statements I would be more than willing to give them a loan upto $6,000 million. This amount has been decided as the current debt to assets ratio is 65% and the total assets with the company is %18,154 million. Thus, the remaining 35% of $6,000 million do not have any recourse over them. Thus up to this amount my loan is backed by the security of this assets. The only thing to worry about is the future due to the banning of tobacco consumption. This might stop the business of the company or reduce it from the current level. But, nevertheless, my loan will still have the security of the assets they currently have. As an Investor As an investor, I am not willing to invest in the company. The company’s market value has been decreasing overtime. Thus, this does not promise me returns on my investment. The value of my investment will reduce overtime and so it is a non-profitable venture in which I am not willing to go. Bibliography BIZ Stats. (2010). BizStats - business statistics, industry statistics, financial ratios. Retrieved February 12, 2010, from BizStats: http://www.bizstats.com/reports/corp.asp?industry=Beverage+and+tobacco+product+manufacturing&profType=ratios&var=&coding=31.2 Investopedia. (2010). Liquidity Ratios. Retrieved February 12, 2010, from Investopedia: http://www.investopedia.com/terms/l/liquidityratios.asp NET MBA. (2007). Financial Ratios. Retrieved February 12, 2010, from NET MBA: http://www.netmba.com/finance/financial/ratios/ NIMS. (2010). Asset Utilization Ratios. Retrieved February 12, 2010, from Hib Pages: http://hubpages.com/hub/Asset-Utilization-Ratios NYSE. (2010, February 12). Retrieved February 12, 2010, from New York stock Exchange: www.nyse.com Peaveler, R. (2010). Use Profitability Ratios in Financial Ratio Analysis. Retrieved February 13, 2010, from About.com : Business Finance: http://bizfinance.about.com/od/financialratios/a/Profitability_Ratios.htm Peavler, R. (2010). Asset Management Ratios. Retrieved February 12, 2010, from About.com : Business Finance: http://bizfinance.about.com/od/financialratios/f/Asset_Mngt_Ratios.htm Profitability Ratios. (2010). Retrieved February 12, 2010, from Investopedia: http://www.investopedia.com/terms/p/profitabilityratios.asp Reynolds American Inc. (2009, 2008). Annnual Report. US: Reynolds American Inc. Reynolds American Inc. (2010). Retrieved February 12, 2010, from Reynolds American Inc.: http://reynoldsamerican.com/RAIDefault.aspx Universal Corporation. (2010, February 12). Retrieved February 12, 2010, from Universal Corporation: http://www.universalcorp.com/ Universal Corporation. (2009, 2008). Annual Report. US: Universal Corporation. Read More