Financial Ratio Analysis of Apix Printing and Competitors

This report presents a comparative financial analysis of Apix Printing, Deluxe Corporation, and R.R. Donnelley & Sons Company, focusing on their performance from 2016 to 2017. The analysis employs key financial ratios, including current ratio, debt-to-equity ratio, gross margin percentage, net profit margin, and return on equity, to evaluate the companies' liquidity, capital structure, profitability, and operational efficiency. The study reveals that Deluxe Corporation demonstrated the most consistent financial performance over the two-year period, while Apix Printing showed better results than R.R. Donnelley & Sons Company. The report highlights the strengths and weaknesses of each company based on the calculated ratios, providing insights into their financial health and strategic positions within the printing industry. The conclusion summarizes the comparative findings, emphasizing the importance of financial ratio analysis in assessing company performance and making informed business decisions.

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Table of Contents
Introduction................................................................................................................................2
Explanation................................................................................................................................2
Current ratio...........................................................................................................................3
Debt to equity ratio.................................................................................................................3
Gross margin percentage........................................................................................................4
Net profit margin....................................................................................................................4
Return on equity.....................................................................................................................4
Conclusion..................................................................................................................................5
Reference....................................................................................................................................6

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Introduction
The main objective of the report is to analysing the financial performance of Apix
Printing and compares it with the financial performance of Deluxe Corporation and R.R.
Donnelley & Sons Company over the years from 2016 and 2017. For analysing and
comparing the financial performance of the companies various financial ratios like current
ratio, debt to equity ratio, gross margin percentage, net profit percentage and return on equity
percentage will be taken into consideration.
Explanation
APIX PRINTING
Ratio 2017 2016
Current ratio 1.13 1.29
Long term debt to equity ratio 0.65 1.58
Gross margin 21.74% 15.68%
Net profit margin 5.83% 1.37%
Return on equity 31.05% 10.27%
DELUXE CORPORATION
Ratio 2017 2016
Current ratio 0.92 0.96
Long term debt to equity ratio 0.66 0.82
Gross margin percentage 83.24% 80.24%
Net profit margin percentage 15.66% 12.41%
Return on equity percentage 22.68% 26.04%
R.R. DONNELLEY & SONS COMPANY
Ratio 2017 2016
Current ratio 1.43 1.63
Long term debt to equity ratio -10.34 -25.80

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Gross margin percentage 3.67% 20.15%
Net profit margin percentage -0.50% -7.26%
Return on equity percentage 16.95% 537.85%
Current ratio
Current ratio is the liquidity ratio that is used to measure the ability of the company to
pay off its short term obligation with the current assets available with the company. In other
words large amount of current assets as compared to the current liabilities indicates that the
company is able to pay off the obligations on becoming its due. This ratio can be used to
compare the liquidity position of various companies at the same industry (Vogel, 2014).
Generally, the current ratio of 1 or more is considered good as it states that current assets can
cover the current liabilities. Looking into the current ratio of 3 companies it can be found that
current ratio of Donnelley & Sons Company is best among 3 and for Apix Printing it is better
than Deluxe Corporation. Hence, the current ratio of Deluxe Corporation is worst among all
(Babalola & Abiola, 2013).
Long term debt to equity ratio
Long term debt to equity ratio measures the company’s long term debt percentage
against shareholder’s equity. Higher long term debt to equity ratio indicates that the company
has aggressive strategy for growth that is funded through long term debt. However, the
additional leverage at the same time increases the financial risks of the company as the
company will be overburdened with the interest obligation (Delen, Kuzey & Uyar, 2013).
Looking into the long term debt to equity ratio of 3 companies it can be found that the
leverage position of Deluxe Corporation is best among all. Apix printing was highly
leveraged in 2016. However, it improved its position in 2017. Donnelley & Sons Company’s
long term debt to equity ratio is worst among all.

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Gross margin percentage
Gross profit ratio is the profitability ratio that reveals the relationship among the
revenues and gross profit. It is useful metrics that is used for evaluating the company’s
operational performances. It is computed through dividing the gross margin by the revenue of
the company (Zainudin & Hashim, 2016). Looking into the gross profit margin of 3
companies it can be found that gross profit of Deluxe Corporation is best among all and for
Apix Printing it is better than Deluxe Corporation. Hence, Donnelley & Sons Company’s
gross profit margin ratio is worst among all.
Net profit margin
Net profit margin is the profitability metrics used to assess the profit earning capacity
of the company from its revenue. It reveals the relationship among net profit after taxes and
revenues. It further indicates the percentage of net revenue available with the company after
payment of all the operational expenses (Kanapickienė & Grundienė, 2015). It is computed
through dividing the net profit after taxes by the revenue of the company. Looking into the
net profit margin of 3 companies it can be found that net profit of Deluxe Corporation is best
among all and for Apix Printing it is better than Deluxe Corporation. Hence, Donnelley &
Sons Company’s net profit margin ratio is worst among all and the company was not able to
earn positive net income for both 2016 as well as 2017 (Innocent, Mary & Matthew, 2013).
Return on equity
Return on equity ratio is used to measure the return rate that is received by the
shareholders of the company on their holdings. It indicates how good the company in
generating the returns on shareholder’s investment is. If the company has ROE of 1 it
indicates that the shareholder generates the net income of $ 1 (Xu et al., 2014). It is crucial
from the investor’s perspective as the investor judges the efficiency the company in
generating additional revenue. Looking into return on equity of 3 companies it can be found

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that return of Deluxe Corporation is most consistent among all (Deluxe, 2018). For Apix
Printing it is significantly increased from 2016 to 2017. However, for Donnelley & Sons
Company’s both net income and shareholder’s equity for 2016 as well as 2017 are in
negative.
Conclusion
From the above discussion it is concluded that if the overall financial performance of
3 companies over last 2 years are taken into consideration it can be identified that the
performance of Deluxe Corporation is best and consistent over 2 years period. However, the
performance of Apix Printing is better than Donnelley & Sons Company. Further, it is found
that the net income as well as the shareholder’s equity both for Donnelley & Sons Company
for 2016 as well as 2017 is in negative which have adverse impact on its performance.

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Reference
Babalola, Y. A., & Abiola, F. R. (2013). Financial ratio analysis of firms: A tool for decision
making. International journal of management sciences, 1(4), 132-137.
Delen, D., Kuzey, C., & Uyar, A. (2013). Measuring firm performance using financial ratios:
A decision tree approach. Expert Systems with Applications, 40(10), 3970-3983.
Deluxe. (2018). Products and Services for Small Businesses and Financial Institutions.
[online] Available at: https://www.deluxe.com/ [Accessed 14 Jul. 2018].
Innocent, E. C., Mary, O. I., & Matthew, O. M. (2013). Financial ratio analysis as a
determinant of profitability in Nigerian pharmaceutical industry. International journal
of business and management, 8(8), 107.
Kanapickienė, R., & Grundienė, Ž. (2015). The model of fraud detection in financial
statements by means of financial ratios. Procedia-Social and Behavioral
Sciences, 213, 321-327.
Vogel, H.L. (2014). Entertainment industry economics: A guide for financial analysis.
Cambridge University Press.
Xu, W., Xiao, Z., Dang, X., Yang, D., & Yang, X. (2014). Financial ratio selection for
business failure prediction using soft set theory. Knowledge-Based Systems, 63, 59-
67.
Zainudin, E. F., & Hashim, H. A. (2016). Detecting fraudulent financial reporting using
financial ratio. Journal of Financial Reporting and Accounting, 14(2), 266-278.

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