美国Village和Fresh超市会计财务报表对比分析英文版.docx
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美国Village和Fresh超市会计财务报表对比分析英文版
BFIN/ACTG441
FinancialStatementAnalysis
Project#2
Ratioandcommon-sizeanalysis
VillageSuperMarket,Inc.
V.S.
FreshMarket,Inc.
By:
XiaoruLiu
02/21/2016
SummaryofCompanies:
BothVillageSuperMarketandTheFreshMarketaregroceryretailersthatareheavilyinvolvedintheircommunitiesandstrivetobringfreshfoodforallatareasonableprice.
Mycompany,VillageSuperMarket(VSM),alsoknownasShopRite,isaretailgrocerystorethatstrivesforexcellence.VillageSuperMarketcurrentlyemployeesover6,700employees.Therearecurrently29ShopRitestoresoperatinginnorthern,centralandsouthernNewJersey,Pennsylvania,andMaryland.Theyareallownedandoperatedbyonefamily(AboutVillageSuperMarket,Inc.,2015).Theirvisionistohelpfamilieslivebetterlives(AboutVillageSuperMarket,Inc.,2015).Someoftheirproductsandservicesinclude,butarenotlimitedto;abakery,seafood,meatandpoultry,delianddairy,dailyhouseholditems,frozenfoods,freshproduce,bakingandcookingingredients,snacks,candy,organicproducts,pharmaceuticals,floralservices,theShopRiteBrand,alcoholicbeveragessuchaswineandbeer,cateringservices,beautyandhealthproducts,etc(VillageSuperMarket,Inc.WeeklyCircularCategories,2015).
Competingcompany,theFreshMarket(FM)isalsoagoodgroceryretailer.WhatstartedinNorthCarolina,isnowspreadacross27statesandhasabout169stores(TheFreshMarket,Inc.AboutUs,2013).FreshMarketemploysabout7,800employees.Someoftheirproductsanddepartmentsinclude;candy,deliandcheese,produce,groceryanddairy,bakingandsnackingingredients,preparedfoods,floralshop,gifts,seafood,healthandbeautyproducts,dailyhouseholditems,wineselectionsandtheirveryownFreshMarketBrandofproducts(TheFreshMarket,Inc.Departments,2013).
AnswerstoQuestions
1.Whichofthetwocompaniesisthemoreliquid?
Isyourcompany’strendpositiveornegative?
TheVSMhasahighercurrentratioof1.413thanthe1.118ofFM.Withregardstoliquidity,Ifoundthatwhileneithercompanyhadmorethanonedollarofcashtocovereachdollarofdebt,VSMisverynearthatmarkat0.937,whileFMiscurrentlyat0.608.Thistellsusthatwhileneithercompanyhavelargeenoughdebtratiostoaccountforbeingindebtduetoleveragingexpansionandgrowth,theyarebothstillstrugglingtoreachthemarkofbeingabletopayforwhattheyowe.Essentially,somethingisdefinitelyholdingbothcompaniesback,especiallyFM,frombeingabletogrowandbecomelucrative.Furtheringthisideaiseachcompany’scashratio.WhileVSMisat0.614,FMiscurrentlyat0.403,displayingthateachcompanyhastherespectiveproportionofcashorcashequivalentsinvestedincurrentassetstocovercurrentliabilities.VillageSuperMarketisperformingconsiderablymoreliquidthantheFreshMarket.Differentwithnormalcompanies,thosetwomarketshasagratecashflow.Althoughthisratioofmycompanychanges,Ithinkmycompanygetsbetternow.
2.Whichofthetwocompaniesismoreleveraged?
Isyourcompany’strendpositiveornegative?
TheleverageratiosIfoundtobeparticularlyhelpfulinthisscenarioincludednotonlythedebtandtimesinterestearnedratios,butalsothedebttoequityandcashcoverageratios.ThedebtratiointhiscaseVSMonlyhas0.222oftheirassetsfinancedbydebt,whileFMhas0.388oftheirassetsfinancedbydebt.Thissituationcanbeviewedfromacoupledifferentstances:
first,thenegativestanceonFMthattheyareatagreaterfinancialriskbeingatcloseto40%oftheirassetsbeingfinancedbydebt;yet,ontheotherhand,youcouldalsosaythatVSMisnottakingenoughriskandinvestingintheirowngrowth.Now,IcannotsaywithanycertaintythatVSMisnotusingtheirownmoney,whetheritbecashorretainedearningsthathavebeenreinvested,tofinancetheirownlongtermassets.AllIcansay,isthatFMisusingclosetodoubletheamountofdebttoinvestintheirgrowth.Whiledebtratiostendtovarywidelyacrossdifferentindustries,thegrocerysectortendstobearound64.05%(TheStreet.GettingDowntoTheFundamentals,2001).Themoreimportantratioinreferencetothegrocerysectoristhedebttoequityratio.VSMhasadebttoequityratioof0.380,whileFMhasaratioof0.635.Comparedtotheretailindustryaverageof0.80,I’msurethatVSMandFMbothfallquiteshort.Also,mycompanyisgood,ButIdothinksthisonecanbehigher.
3.Whichofthetwocompaniesismoreprofitable?
Isyourcompany’strendpositiveornegative?
Astotheprofitabilityabilities,here,FMreallystandoutoverVSM;inboththegrossprofitmarginaswellastheoperatingprofitmargintheyleadwithratiosof0.339and0.059,respectively,whileVSMisonlyat0.273and0.027.ThereturnsonequityofFMisalsohigher.Althoughthereisasubstantialdifferenceinratiosforthesetwocompanies,takingintoaccountthefactthattheyarebothgrocerystores,consideringhowsmallthemarginisonaportionoftheirproducts.Andmycompanyalsochangesatthispart,whichmakesmedon’tknowifit’spositiveornot.
4.Whichofthetwocompaniesismoreefficient?
Isyourcompany’strendpositiveornegative?
Uponinitialobservation,wecanseethatVSMandFMhaveverysimilarassetturnoverratiosof3.650and3.262,whichistobeexpected.Thereasonthisisnotahugesurpriseisthatthesecompaniesdonotnecessarilycompeteinthisarea,astheyarebothsupermarkets,theonlylongtermassetstheymayhavewouldbeforkliftstomaneuverstockandinventory,possiblyscannersandothertechnologiesusedatPOSorforinventorymanagement,andetc.,noneofwhichwouldbedecidingfactorsinhowwellthecompanyitselfisdoing.However,whenwelookatinventoryturnover,thingsbegintoclearup.InventoryturnoverdatameansthatVSMsellsitsproductsatafaster,moreefficientrate.TheinventoryturnoverrateforVSMandFMare25.139and16.795,respectively.Thistellsusthateachcompanyturnstheirinventoryoverthatmanytimesperyear.VSMdobetterinthispart.Also,aloweraccountsreceivableandaccountspayableindicatethatthiscompanyisefficientandlowrisk.FMdobetteratthispartexpectof2011,makesithaveamorereliablecashflow.Butbothofthemarereallylow,andmycompanyispositiveatthispart
5.Whichofthetwocompanieshasthegreaterabilitytorepayitsdebtontime?
UsethedatashowninQuestion2,wecanfindthatbothofthesecompanieshaveagoodratiooninterestcoverageratio,andVSMhasabetterone,whichmeansVSMhasagreaterabilitytorepayitsdebtontime.
Ifailedtofindtheleasepaymentofthesetwomarketssoneglectthefixedchargecoverage.
6.WhatisthetrendinGrossProfitMarginandNetProfitMargin?
Thoseindexestrendtobesmaller,inmyopinion.Althoughthereisasubstantialdifferenceinratiosforthesetwocompanies,takingintoaccountthefactthattheyarebothgrocerystores,consideringhowsmallthemarginisonaportionoftheirproducts.SoIdothinkagoodwillandagoodservicemeansalotforacompanylikeVSMandFM.
Summary
Bothoftwocompaniesmadeagreatwork.Lookingatthesetwocompanies’financialperformance,acouplesubstantialdifferencesstillstandout.Theactivity,leverage,marketvalue,liquidity,andprofitabilityratiosshowthatVillageSuperMarketisrelativelyperformingconsiderablybetterthantheFreshMarket.
Bibliography
VillageSuperMarket,Inc.(2015).RetrievedFeb./03/2016,from
VillageSuperMarket,Inc.Community(2015).RetrievedFeb./03/2016,from
TheFreshMarket,Inc.(2013).AboutUs.RetrievedFeb./03/2016,from
VillageSuperMarket,Inc.(2015).WeeklyCircularCategories.RetrievedFeb./03/2016,from
TheFreshMarket,Inc.(2013).Departments.RetrievedFeb./03/2016,from
HoustonChronicle.(2015).FourBasicTypesofFinancialRatiosUsedtoMeasureaCompany'sPerformance.RetrievedFeb./03/2016,from
VillageSuperMarketAnnualReport.(2013).RetrievedFeb./03/2016,from
TheStreet.(2001).GettingDowntoTheFundamentals.RetrievedFeb./03/2016,from