ADC Tellecommunications Financial Ratio Analysis
Corporate Background
ADC Telecommunications (ADCT) is a communication equipment manufacturer located in Minneapolis, Minnesota, USA. Since 1952, the company has successfully weathered the tumultuous transformation process of technology. Today, ADC Telecommunications exclusively focuses on manufacturing computer-networking equipment. Increasing demand for fiber optic transmission systems like asynchronous transfer mode (ATM), synchronous optical networks (SONET) and most wireless communications systems, provide significant opportunities for ADCT. The company currently focuses on enabling communications service providers to deliver high-speed services to residential and commercial customers. The following is an annual analysis of ADCT's financial ratios of years 1995-1999.
Overall Performance Measures
The averaged price/earnings (P/E) ratios for ADCT are 36, 36.3, 39.4, 27.5, and 64.1 for years 1995-1999 respectively. The P/E ratio for ADCT is very stable from 1995 to 1997. In 1998, the P/E ratio fell over 43% to 27.5. The P/E ratio then rocketed to 64.1 in 1999, a 57% increase in one year. This dramatic increase indicates current investors are placing more value on future earnings as compared to previous years. One-reason ADCT investors pay more to own the stock is the growth potential in the communication equipment sector. For example, Internet traffic doubles every 100 days, illustrating the growth potential for ADCT's sales and bottom line earnings (Annual Report, 1999). Investors are currently willing to buy the stock at an inflated price due to two main reasons, the company's future earning potential and present growth rate in the industry.
The returns on assets (ROA) ratios for ADCT are 9.20%, 11.40%, 11.60%, 11.30% and 5.20 for the years 1995-1999. There were no ROA industry averages in the "Almanac of Business and Financial Ratios," written by Leo Troy. ADCT's ROA ratios remain constant (around11%) from 1995 -1998. In 1999, ROA dropped 54% to 5.20. This decline indicates that ADCT may not be utilizing its assets properly. One explanation for the 1999 decrease is ADCT's acquisitions. For example, ADCT purchased Broadband Access Systems for 2.25 billion exchange of stock (Datek, 2000). Recent acquisitions require additional long-term debt and are reflected in the ROA reduction...
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... low rate or utilize other financing activities with a low quick ratio. This is a negative trend in ADCT's profitability possibilities.
Financial Condition
ADCT's financial leverage ratios are 1.1, 1.2,1.2, 1.4 and 1.3 for 1995-1999. There are no industry comparisons available. The trend is constant with little variation.
ADCT's debt/equity ratios are 17.7% 24.5, 24.7, 42.2 and 34.0 for 1995-1999. There are no comparison ratios. There was a dramatic increase in 1998. This increase reflects ADCT's 1998 decision to sell additional stock in the NASDAQ exchange. ADCT has used the raised capitol to invest in operating activities and is reflected in the reduction of this ratio in 1999.
Cash flow/ debt ratios for ADCT are 49.1%, 42, 43, 21 and 81 for 1995-1999. There is a dramatic increase in 1999. This increase is due to increased expenses in 1999, reducing cash generated by operating expenses. ADCT also issued stock in 1998, increasing the total debt of the company. ADCT must use its newly acquired debt to generate more cash flow to improve the financial condition of the company.
Tests of Dividend Policy
ADC Telecommunications pay no dividends.
This section will discuss ratio analysis for the following ratios: current ratio, quick (acid-test) ratio, average collection period, debt to assets ratio, debt to equity ratio, interest coverage ratio, net profit margin, and price to earnings ratio. Depending on the end user which ratio carries more importance, however, all must be familiar with ratio analysis. Details on each company's performance for each of these areas can be found in the attached ratio analysis worksheet.
The figure has reduced from 0.75, in 2012. It is reassuring that this figure has reduced to 0.53 and is sustained over 2013/2014. This acquisition of Norit NV has proved to be successful as Cabot Corp was able to reduce its debt to equity ratio in a short space of time.
Looking at the individual ratios seen in exhibit 1 and comparing it to the industry average shown in exhibit 2 gives a sense of where this company stands. Current ratio and quick ratio are really low and have been decreasing. For 1995, the current ratio is 1.15:1, which is less than the industry average of 1.60:1, however to give a better sense of where this stands in the industry, as seen in exhibit 3, it is actually less than the average of the bottom 25% of the industry. The quick ratio is 0.61 is less than the industry is 0.90. Both these ratios serve to point out the lack of cash in this company. The cash flow has been decreasing because, it takes longer to get the money from customers, but the company still needs to pay for its purchases. Also, the company couldn’t go over the $400,000 loan limit, so they were forced to stretch their cash.
In 2003 as a response to communities with a large amount and growing number of youth gangs the Office of Juvenile Justice and Delinquency Prevention (OJJDP), a branch of the U.S. Department of Justice, initiated the Gang Reduction Program (GRP) (U.S. Department of Justice 2008). The formation of gangs is seen as a response to system failures and community dysfunction. As a result, one of OJJPD’s anti-gang initiatives is to make communities safer and have a pro-social environment (U.S. Department of Justice 2008). Furthermore, OJJDP plans to provide economic and social opportunities that gangs often promise to new recruits which are often obtained in an illegal and dangerous fashion (U.S. Department of Justice 2008). OJJDP believes that the GRP is capable of addressing the underlying issues for the increasing popularity and intensity of gang activity in specific suburban and rural neighborhoods (U.S. Department of Justice 2008). The program takes an integrative approach to dealing with the issue of increasing membership and participation with gangs. The following will discuss the program’s goal, theoretical basis, methods of operation, and overall effectiveness. After reviewing these major aspects of the GRP I will personally assess the value of this program and conclude whether or not the evidence supporting the program’s efficiency is strong enough for me to recommend it for implementation.
The consistent high spending of capital equipment is the first reason why one would recommend reducing the debt to equity ratio. A company with higher levels of debt is less flexible in being able to adjust to new market demands and conditions that require the company to make new products or respond to competition. Looking at the pecking order of financing, issuing new shares to fund capital investing is the last resort and a company that has high levels of debt, must move to the equity side to avoid the risk of bankruptcy. Defaulting on loans occur when increased costs or bad economic conditions lead the firm to have lower net income than the payments on loans. The risk of defaulting on loans and the direct and indirect cost related to defaulting lead firms to prefer lower levels of debt. The financial distress caused by additional leverage can lead to lower cash flows available to all investors, lower than if the firm was financed by equity only. Additionally, the high debt ratio that Du Pont incurred also led to them dropping from a AAA bond rating to a AA bond Rating. Although the likelihood of not being able to acquire loans would be minimal, there are increased interest costs with having a lower bond rating. The lower bond rating signals to investors that the firm is more likely to default than if it had a higher (AAA) bond rating.
After his father’s death, Hamlet’s thoughts on everything changed. He thought that life was punishing, he could trust no one, and women were just game players trying to mess with the male population. “Or, if thou wilt needs marry, marry a fool; for wise men know well enough what monster you make of them” (Shakespeare 3.1.133-134). Hamlet believes he is speaking privately with Ophelia, however Polonius and Claudius are spying on their conversation. Hamlet senses this and becomes angry with
The streets of Philadelphia are rapidly becoming a home to violent acts and random homicides. Innocent lives are taken every day due to the strong presence of gangs, and the streets are run by unruly groups of fearless young adults. Gang violence in Philadelphia is a major issue, and the citizens will never be safe until gang prevention occurs. Gang prevention is not a simple task, but with the right resources available, it is possible. Gang violence is a problem that will contribute to the collapse of Philadelphia, and it has yet to be solved throughout many generations. With gang violence on the rise, the best solution to gang violence is to educate the youth and parents about gangs and use family support to prevent the creation of gang members from the problem’s core.
Gang violence is a growing problem in this world. No parent would like to imagine their kids dealing with weapons or being threatened by them. These violence’s affects each child individually and their families as well. These gangs recruit multiple different individuals for many reasons such as bribery, family traditions, or even threatening. Although, many kids feel like they have to be a part of it but there are many resources out in this world to prevent them from believing so. Gang violence has been a problem in society for several of years and is a growing problem each and every day.
... show that the company is growing and expanding, property and inventory, as a percentage of assets, should be increasing instead of decreasing. More property and inventory, if it is not owned by creditors, would also decrease their debt to total assets ratio.
Hamlet, a tragedy written by William Shakespeare consists of many themes such as madness, portrayal of women, masculinity, imagery and suicide. In this play Shakespeare portrays women inferior therefore they receive a lack of respect from men. In the play, Shakespeare characterizes women as dirty and disgusting and refers to them as prostitutes. Women are also seen weak and obedient which are identified by the only two female characters, Gertrude who is the Queen of Denmark and Ophelia who is Hamlet’s love interest.
If we look at a number of key ratios for Clarkson Lumber, some clear issues emerge. Their Debt to Equity ratio is rising as a result of increased debt. In 1993 the Debt to Equity Ratio was .45. In 1994 it was .68 and in 1995 it was .73. This is a trend that Clarkson will have to take into consideration as he refinances his company.
Statistics show that school-based programs as well as community-based prevention programs minimize gang involvement. School-based programs address substance abuse and violence, which reduces the risk factors for gang involvement. For example, in the article “What Can Schools Do to Prevent Gang Involvement,” by Gary D. Gottfredson, he states, “universal programs in kindergarten through secondary school, which [is a] rewarding educational environment im...
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As the years pass the idea of treating women poorly has died out quickly. Although modern day society is very hostile towards anything even remotely sexist, there is a benefit to seeing how the opinions about women have changed over time. The female characters portrayed in Shakespeare's Hamlet are used as a pawn, only to quicken plot development. Their characters either lack depth, or are killed off where their death can then only end up being forgotten quickly. The main female characters are Ophelia and Gertrude, who are Hamlet’s girlfriend and mother respectively. Ophelia is the only female who undergoes an actual change in her character, but is killed off and is forgotten instantly by the male characters. Roles portrayed by women in the
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