The higher the ratio, the more risky of the company for the shareholders to invested. For the debt-to-equity ratio of the company, it shows a slightly increasing ratio from 0.0025:1 in 2014 to 0.0027:1 in 2015. This shows Nestle (Malaysia) Berhad is a bit risky to be invested compare to the previous year. The equity ratio refers to the amount of money that a company used to finance the assets by using the money invested by the shareholders. The lower the ratio, the higher the ability of the company had to pay back the long term debt.
This means Artic PLC is either spending on higher wages, primary material for its products or extra overheads. -Return on Equity (RoE) ROE measures the ability of a firm to generate profits from its shareholders investments in the company. ROE has been changing through the years, indicating that the company is growing 1.2 of profits in the first year but decreasing 0.2 in the last two years, however, it is not an absolute indicator of investment value. -ROCE: ROCE declined in the three last years, indicating that Artic PLC resources were not being used correctly in order to get better return on its capital. If Artict PLC borrows money they expect to have better profitability by next year, this did not happen in the last years exceeding the cost of debt and not returning enough
The ratio refers to the amount of total net income of a company relative to the dividends paid to shareholders. The dividend payout ratio for Nestlé Company as shown in Graph is quite stable. Nestlé Company is paying a constant percentage of net income in the form of dividend to their shareholders each year under constant dividend payout ratio policy. As the percentage of earnings paid out each year is fixed, it implies that the dividend payout ratio will become more stable. Since the dividend payout ratio in Nestlé Company is over 100 percent, it can be said that Nestlé Company pay more money to its shareholders rather than keep the earnings for other financing purpose.
Upon looking at the gearing ratio of Smith & Nephew, a significant increase can be observed between 2013 and 2014. From 6,25% in 2013, its gearing ratio increased more than sixfold up to 39,93% in 2014. When the gearing ratio is this high, this could only mean that the company often has more debts to repay. Therefore, their financing structure is also more uncertain. In order to understand what had driven this drastic increase, it is necessary to evaluate the composition of the ratio.
This indicates that company’s operations are becoming capital intensive as it is growing on its expansion path. On the other hand, it has witness declining tax rate due to which there is an increase in Net Income. • Company has posted good consistent profit growth of 26.8% over last 5 years and has achieved highest ever-quarterly Net sales of INR 104.25 crores, registering a growth rate of 32.9%. Company has achieved ROE of 18% over last 5 years. Moreover, company has rewarded shareholders by paying regular dividends and had announced interim dividend at 35% in current year.
As a result of, stock price tends to fall down for a period of time after the announcement. However, Glenn (1990) has argued that stock price behaviour is also depend on company's balance sheet and business performance. Indeed, share price of GAB has increased 70.64% from the year of 2010 and this could be due to the strong performance balance sheet of GAB from previous
For example, if a hedge fund manager generates a 20% return per year, after management fee, the hedge fund manager will collect 4% of those profits, leaving the investor with a 16% net return. In many cases, this is an attractive return despite the high incentive fee, but with more mediocre managers entering the industry in search of fortune, investors have more often than not been disappointed with net returns on many
Higher earnings per share are always better than a lower ratio because this means the company is more profitable and the company has more profits to distribute to its shareholders. 2.4.2 Dividend per Share The sum of declared dividends for every ordinary share issued is the total dividends paid out over an entire year which including interim dividends but not including special dividends and divided by the number of outstanding ordinary shares issued shares. Dividends are a form of profit distribution to the shareholders. Having growing dividend per share can be a sign that the company’s management believes that the growth can be sustain. 2.4.3 Dividend Payout Ratios The price earnings ratio, often called the P/E ratio or price to earnings ratio, is a market prospect ratio that calculates the market value of a stock relative to its earnings by comparing the market price per share by the earnings per share.
Consequently there is an increase in debt to equity ratio by 80% in 2016, hence the ability to obtain funds becomes easier (Financial Times, 2016). We have selected Greene King Corporation, which is in similar industry and has similar impairment policy as WTB. Greene King has reported a net impairment loss of £32.2M in 2016, representing 17% of its Group profit (Greene King, 2016). The factors identified are similar to WTB as discussed above. Greene King has reported much higher impairment loss as compared to WTB.
Capital Turnover Ratios : This ratio shows the efficiency of capital employed in the business by computing how many times capital employed is turned over in a stated period . The higher the ratio , the greater are the profits , lower the ratio means sufficient sales are not being made and profits are lower . The trend shows that the firm has been able to maximise sales by turning capital over and over which lead to increased sales .The Capital Turnover ratio has increased from 27.66% to 33.35% recording the highest in FY2015-16 due to increased sales which increased by 5.4% Stock Turnover Ratio : It denotes the speed at which inventory will be converted into sales . This ratio denotes the speed at which the inventory will be converted into sales, thereby contributing for the profits of the concern. If the ratio was higher then it would have indicated that finished stock is rapidly turned over.