Groupon

FINANCE RATIOS

No. | Ratios | 2011 | 2010 | Implication |

1 | Net profit margin = Profit after taxRevenue | 2,49% | 2,21% | |

2 | ROA = Net incomeTotal assets | 4,57% | 4,21% | |

3 | ROE = Net incomeCommon Equity | 29,21% | 31,04% | ROE is above industry average (23,8%) |

4 | Current ratio = Current assetsCurrent liabilities | 1,62 | 1,74 | The current and quick ratio are both OK, but cash ratio is too low which is mainly because of high trade receivable. The liquidity looks ok but is risk of bad debt… However, the TIE> 1 , so the company still have the ability to pay interest, but in longterm it will cause troubles |

5 | Quick ratio = Current assets-InventoryCurrent liabilities | 1,43 | 1,52 | |

13 | Cash ratio | 0,0073 | 0,013 | |

10 | TIE= Operating incomeInterest expense | 2,58 | 2,25 | |

6 | D/A= Total liabilitiesTotal Assets | 0,82 | 0,84 | It’s > 0,5 most of the company is financed through debt |

7 | Days of inventory = InventoryCost of good sold/365 | 29,44 | 30,55 | |

8 | Inventory turnover Cost of goods soldAverage inventory | 13,27 | | |

9 | ACP = Account receivableSales365 | 150,38 | 138,35 | 150,38 is much more than the number of its payment term which is 30 days of invoice. This indicates that many of its customer do not pay the bills in time, and JOT may get troubles to collect the money from them. The Average Collection Period is increase from 2010 to 2011, that’s the reason JOT has to change it’s trade( payment) policy. |

11 | Financial Leverage Ratio = total debtShareholder equity | 4,77 | 5,40 | Industry average is 0,68. Furthermore, 4,77 is too big number, raise a red flags about its financial situation. Most of its assets are financed by debt. |

12 | Operating profit margin | 5,58% | 5,41% | |

13 | Net operating working capital | 1782 | 1565 | |

14 | Net cash flow = Net income + DA | 486 | | |

15 | NOPAT= EBIT ( 1 – Tax rate) |...