Financial Analysis write up on case provided Essay

Financial Analysis write up on case provided - Essay Example This can be due to the fact that Inventories, over the period of time has shown considerable increase hence necessitating the obtainment of external financing to fund the inventory purchase. Return on equity has greatly dipped as the company despite increasing its equity base has not been able to generate more return on its equity. From the strategic management point of view, the return on equity ratios are more critical since managers has the primary responsibility of creating value for its shareholders which company seem to have failed to achieve for the period under review. The corporate performance specially the return on the equity is a strong indicator to the investors in the capital market signaling the overall future direction of the company. This is also evident from the fact that the share price of the stock of the company has constantly dipped in the period under review and hit a low price of $62 in year 1962. Strategically dwindling confidence of the investors may not help achieve company its proposed objectives as it progresses in the future. A closer look at the gross margins earned by the company suggest that the core costs are well under the control of the company however over the period of time, its operating margins are decreasing showing the lack of control over the increase in the general and administrative overheads. Though organization seems to managing its assets in better way however this may also due to the fact of higher accumulated depreciation. Strategically the decreasing profitability of the company can be a difficult problem to handle with as the outside investors keep a very keen eye on the bottom lines of the organization’s income statements. However it must also be note that the return on the overall capital employed and Return on invested capital, both have shown an abnormal dip as mainly due to constant profitability. The almost constant level of profitability also suggest that