University Finance Report: Analysis of Warehouse Ltd.'s Performance

This report presents a financial analysis of Warehouse Limited, evaluating its performance over the past three years. The analysis includes an assessment of profitability ratios, revealing a decline in earnings compared to previous years. It also examines liquidity and solvency positions, noting that while the current ratio is good, the quick ratio is inadequate due to high inventory levels, and the solvency position is strong due to reduced debt. The report further explores capital budgeting aspects, suggesting that new projects are expected to generate income. Additionally, a risk analysis compares Warehouse Limited to its competitor, Briscoe, indicating higher standard deviation and coefficient of variation, thus positioning Warehouse Limited as riskier in terms of its stock. Finally, the report addresses stakeholder concerns, assuring an employee that their job is secure despite the profitability decline, as the company still generates sufficient profit to meet its expenses.

Me (Financial expert): Good afternoon everyone. Hope you all are doing fine
External stakeholder (supplier): Good afternoon Mr Jackson
Internal stakeholder (employee): Good afternoon
Me: as per your request I am ready with the analysis report. It contains analysis for the
Warehouse Limited’s performance for last 3 years, risk analysis of its stock and capital
budgeting assessment. Tell me from where shall I start?
Internal stakeholder: as per my knowledge the company is facing some issues regarding
earning profits. Please carry on with its profitability position.
Me: well Mr. Sam to some extent you are right. Profitability ratios of the firm is declining
every year which means firm is earning less profit compared to its previous year’s
performance.
External stakeholder: Tell me something about its liquidity as well as solvency position as
recently the company asked for credit period of 6 months instead of usual 3 months for a
contract involving large amount.
Me: sure, though the current ratio is good, as large amount of current assets are held into
inventories that makes the quick ratio inadequate. However, its solvency position is good as
the debt has been reduced over the years.
Internal stakeholder: tell me something more
Me: at present scenario if the company invests into any new project the same is expected to
generate income for the entity. One more important aspect I need to highlight is that while the
SD and CV of Warehouse are compared with its competitor Briscoe, I found that the both for
Warehouse are higher against its competitor Briscoe. Hence, Warehouse is considered to be
more risky in context of its stock.
External stakeholder: it means the asked credit period can be allowed as of now or I shall
consider is again?
Me: yes, it can be allowed as of now.
External stakeholder: Thank you Mr Jackson

Internal stakeholder: is the earning capacity can be a concern as of now? Do I need to be
worried and search for any other job?
Me: See, though the profitability position has been deteriorated, it is still earning sufficient
profit to meet its expenses including employee’s wages and salaries. Hence, as of now you
need not to be worried.
Internal stakeholder: Thank you for providing me with the required details.
Me: Thank you for contacting me. Please get in touch if you need anything else.