Submitted by: Submitted by NosferatuJim
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Category: Business and Industry
Date Submitted: 10/31/2012 06:25 AM
Case Study 3: WG Wearne 12009
Introduction
The accounting industry. compared financials are for a company at full called WG Wearne - a cement and aggregates Months supplier to the building 08 (LTM) period and (up /
~
We have looked to Interim
year 07, 08 and calculated appropriate. Revenues
a Last Twelve
to August
as well, where
have increased
significantly
in the 07-08
52%). This is slightly acquisition materialised growth of
down from the 06-07 period and, according sand quarries and acquisition
to the statements mobile
made, has been driven crushing equipment. (much faster positive clues that of potential
by the also
additional
of additional
This
in significantly at a time been
growing when the
profits. market
The company in which the
has been growing has been statement
successfully experiencing
than GDP and
rates)
it operates interim somewhat.
growth the
conditions environment particular Du Pont
have
relatively
benign.
However,
pyK' some
a number
market issues, in
has changed
and that they are struggling
This c~t~ on below.
with respect to debt, interest Model
cover which we comment
Du Pont Model
ROE Efficiency Profitability Leverage
2007
18.7% 1.00 0.07 2.53
2008
22.3% 1.03 0.07 2.91 point for a summary return on equity Efficiencies leverage rate It is clear here that to this leveraging the
,debtor
are potentially
low for a
business of this size, although facie a concern
with the extended
days) this is not prima
the key issue is that they will need to fund debt repayments.
Massive decline in P\E ratio caused by the 40% fall in share price expresses the markets concern for this company Because earnings yield is the inverse of the P\E ratio, the marginal reflected as a marginal increase in earnings yield. decrease in P\E is
* Share prices were attained WG Wearne month further products unlikely times...