Carrefour
Introduction:
The firm that I have selected for the assignment is Carrefour. Carrefour is a global association of administration of food, drugstore, electronics, and sports. The firm comes from France and it is the second-largest retailer in the world (Vidalon, 2017). It has stores in more than 31 countries in Europe, Latin America, and Asia. In France, there are more than 4,500 Carrefour stores that account for 43% of sales.
The data of the following study of using financial ratios is based on the financial statements of Carrefour company in the year 2015 and 2016.
Analysis of the ratios:
Liquidity ratios:
Liquidity ratios reveal the financial position of the corporation. To be more specific is the group of ratios responsable for analyse if the business has sufficient money to cover it is short-term liabilities within the next year.
One of the liquidity ratios is the current ratio. Carrefour is working with a significantly low current ratio of 0,75, it means that if the Carrefour company liquidated of it is current assets, it only had available to cover 75% of the current liabilities in 2016.
The Quick ratio of Carrefour in 2016 was 0,48, the ratio shows Carrefour can just cover 48% of current liabilities by using all money on hand, liquidating short-term in demand and monetizing accounts receivable.
The quick ratio for 2015 was 0,49, however, the ratio decreased by 1% in 2016, the company receives a lot of cash in their business, therefore, the number in my view is right, that means Carrefour trust on inventory or assets to pay the liabilities(short-term).
Debt management ratios:
The debt management ratios. This group of ratios show us the total amount of financing of the company compared to the total amount of the company's debt.
The total debt assets ratio, In 2016 the ratio was 0,754, which is below 1. Therefore, per euro of assets, Carrefour has about 75 cents of liabilities.
The time interest earned in 2016 shows Carrefour can pay your interest 3,6 for out of your ebit.
Profitability Ratios:
The profitability ratio reveals their effectiveness at generating earnings.
Net Profit margin shows us the percentage of the profit of the company that has obtained, in this case Carrefour at the end of a period. The ratio was 1,1%, that means Carrefour got 1,1% of her sales into profits.
ROA: analyzes the performance of the company’s assets in generating profits for the business. The Return On Assets ratio in 2016 was 1,8%. Every euro that Carrefour’s invested in assets in 2016 generated 2 cents of net income.
The ROE (Returns On Equity) shows the quantity of net income ought to be returned to the shareholders. The ratio was 7,4 % in 2016, the shareholders saw a 7,4% return on their investment. Carrefour ratio is considered low for her industry.
Assets based on ratios:
The inventory turnover ratio converted their inventory 10,89 times. It is a great ratio, in 2015 was 12,094. It shows that the suppliers financing all inventory. The ratio decreased by around 2% in 2016.
Days sales outstanding ratio is the measure of the number of days the company charges after having made a sale. The DSO of Carrefour was 13. It is considered low for the company. it means that Carrefour takes less days to collect from it is customers.
The Fixed assets turnover ratio of Carrefour creates a sales revenue of 5,71 for each euro invested in fixed assets in 2016, in contrast, Carrefour in 2015 generates a sales revenue of 6,37 euros for each euro invested in fixed assets. Carrefour in 2016 is, therefore, less efficient than in 2015 in using the fixed assets.