Financial Analysis of Kingston Wharves Ltd. (2006 – 2009)

Liquidity Ratios

Steady Liquidity Ratios captured for the four year period showed that Kingston Wharves Limited was not liquid. They would therefore have difficulties repaying short-term creditors out of its total cash. Kingston Wharves remained liquid enough just to cover its obligations

Current Ratio

Using the Current ratio shows how well the company can meet/cover its short-term obligations. The ratio for captured for the period indicates that the company is that the company would be able to cover its debts by liquidating its assets if they had to.

Quick Ratio

The Quick Ratio test is the test of a company’s liquidity. It ignores inventory which can take some time to be converted to cash depending on the length of the company’s operating cycle. Kingston Wharves’ Quick Ratios showed that they were unable to use cash or cash equivalents to repay current liabilities.

Interval Measure

Indicates the amount of days the company can operate using only the cash on hand

Profitability Ratios

Kingston Wharves Limited was indeed profitable throughout the four year period

Gross Profit Margin

• Gross Profit Margin was at a high for the four year period

• 45% in 2007.

• 2008 at 56%,

• 47% in 2009

• 46% in 2010

Net Profit Margin

• Net Profit Margin was at its highest in 2007 with a margin of 13%, it decreased to 7% in 2008, and 3% in 2009 then increased to 6% in 2010.

Leverage Ratios

Debt to Equity Ratio

The Debt to Equity Ratio indicates the relative uses of debt and equity as sources of capital to finance the company’s assets. Kingston Wharves’ debt to equity increased from 0.93:1 in 2006 to 1:19:1 in 2007. Kingston Wharves recorded a high debt/equity ratio for the year 2007. As such it means that a company was aggressive in financing its growth with debt. These situations can result in additional interest expenses.

Debt to Capital Ratio

Long term debt to capital increased from 1.19:1 in 2006 to a high of 1.62:1 in 2007. The years 2008...