Aptar Group Financial Analysis: Reliability as a Cosmetic Partner

This report assesses the financial health of Aptar Group to determine its reliability as a partner for a cosmetics business. It uses financial ratios such as the current ratio, return on equity, gross margin, and long-term debt to equity ratio to evaluate the company's performance. The analysis reveals a favorable current ratio, return on equity, and gross margin, indicating strong liquidity and profitability. However, the high long-term debt to equity ratio suggests a high level of leverage. Despite the leverage concerns, the report concludes that Aptar Group can be considered a reliable partner due to its strong profitability and liquidity, recommending that the company address its debt situation to further enhance its financial stability. Desklib provides similar solved assignments and past papers for students.

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1APTAR GROUP FINANCIAL HEALTH
Table of Contents
Introduction................................................................................................................................2
Ratio selection and explanation.................................................................................................2
Conclusion..................................................................................................................................3
Reference....................................................................................................................................4

2APTAR GROUP FINANCIAL HEALTH
Introduction
The main objective of the report is to measure the financial health of Aptar Group and
to analyse whether the company is reliable partner for the purpose of cosmetics business. For
analysing, various ratios will be used that can assist in evaluating the performance of the
company. Aptar Group provides wide range of serviced with regard to dispensing, packaging
and sealing solutions for personal care, beauty care, prescription drug, injectable, consumer
health care and food and beverage markets.
Ratio selection and explanation
Ratio Formula 2017 Remark
Current ratio Current assets/Current liabilities 3.16 Favourable
Return on equity
Operating profit/Shareholder's
equity*100 24.51 Favourable
Gross margin Gross profit/Revenue *100 35.03 Favourable
Long term debt to equity
ratio
Long term debt/Shareholder's
equity*100 98.98 Unfavourable
Current ratio – current ratio measures the ability of the company to make the payment for its
short-term debts with available short-term assets like cash, inventories, receivables and
marketable securities. Generally, if the current ratio of the company is more than 2 it is
considered that the liquidity position of the company is good and its short term assets are
twice of the short-term liabilities. It can be identified that the current ratio of the company is
3.16 which will be considered as favourable as the company’ short term assets are 2.53 times
more than its current liabilities (Ehiedu, 2014).
Return on equity – it is the percentage of net income that is returned to the shareholders on
their equity. It measures the profitability through analysing the amount of profit that the
company can generate with the invested amounts of shareholders (Ozturk & Acaravci, 2013).

3APTAR GROUP FINANCIAL HEALTH
The return on equity for Aptar Group is 24.51% that can be considered as favourable return
to the shareholders.
Gross margin – gross margin is the percentage of the revenue left with the company after
paying for the cost of selling the goods or providing the services. Higher gross margin of the
company signifies that the company is able to retain more amounts after paying of the costs
(Jordan, 2014). On the other hand, lower gross profit margin signifies that the maximum
amount of revenue is eaten up by the costs. It can be seen that the gross profit margin of
Aptar Group is 35.03% which can be considered as favourable.
Long term debt to equity ratio – this ratio is used to measure the financial strength of the
company. It states the percentage of the assets of the company financed through borrowing
and financed through equity (Vogel, 2014). Very high debt to equity ratio signifies that the
company is highly leveraged and it is not able to generate sufficient cash to meet the debt
obligation. It can be identified that the debt to equity ratio of the company is significantly
high. The company’s debt to equity ratio is 98.98% which is highly unfavourable.
Conclusion
From the above analysis it is found that the current ratio, return on equity and the
gross margin of the company is favourable. Therefore, the company’s liquidity position as
well as the profitability position is favourable. However, if the long term debt to equity ratio
of the company is considered, it can be identified that the company is highly leveraged.
Therefore, except the leverage position, the company is efficient with regard to the
profitability as well as liquidity position. Therefore, Aptar Group can be considered as
reliable partner for the cosmetic business. However, to improve the leverage position the
company shall pay off the debt and raise further fund through equity, if required.

4APTAR GROUP FINANCIAL HEALTH
Reference
Aptar.com. (2018). A market leader in dispensers for the packaging industry | AptarGroup.
[online] Available at: https://www.aptar.com/ [Accessed 19 Apr. 2018].
Ehiedu, V. C. (2014). The impact of liquidity on profitability of some selected companies:
The financial statement analysis (FSA) approach. Research Journal of Finance and
Accounting, 5(5), 81-90.
Jordan, B. (2014). Fundamentals of investments. McGraw-Hill Higher Education.
Ozturk, I., & Acaravci, A. (2013). The long-run and causal analysis of energy, growth,
openness and financial development on carbon emissions in Turkey. Energy
Economics, 36, 262-267.
Vogel, H. L. (2014). Entertainment industry economics: A guide for financial analysis.
Cambridge University Press.