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Finance & Accounting
Pages 4 (1004 words)
Task 1 The company selected to perform a financial analysis is the computer manufacturer Acer Group. Acer Group is composed of three brands: Acer, Gateway, and Packard Bell. The company is the 4th largest PC manufacturer in the world and third largest notebook producer (Acer-group, 2013).
Acer Group generated revenues of $14.74 billion in 2012 (Acer-group, 2012). Its revenues decreased by 9.62% in comparison with the previous year. The gross profit of the company was $1.48 billion and its gross margin equaled 10.04%. Gross margin is a measure of the broad profitability of the company. Despite its solid broad profitability the company incurred in net losses for the year of $99.88 million. Its net losses for 2012 were lower than the 2011 losses of $226.59 million. The net margin of the firm was -0.68%. Net margin measures the absolute profitability of a firm. The return on assets (ROA) of Acer Group was -0.04%. ROA indicates how profitable a firm is in relation to its assets (Investopedia, 2013). The return on assets of Acer Group was bad for two reasons. First the metric result was negative. A negative ROA is an undesirable outcome. The second reason is that it was below the computer industry average ROA of 4.4% (Dun & Bradstreet, 2013). The return on equity (ROE) of the firm was -0.13%. Acer Group’s return on equity is much lower than the industry average of 9.7%. The current ratio measures the ability of a company to pay off its short term debt (Accountingexplained, 2013). This ratio is calculated dividing current assets by current liabilities. Acer Group had a current ratio of 1.19. ...
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