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Financial Report 2013
The discussion and analysis of financial presentation of Rainbow Paint Company delivers an impression of the business’s financial activities for the fiscal year ended December 31, 2013. Financial analysis offers the strong perspective of the routine negotiations of a business. It assists in assessing the present, as well past performance. This analysis is a substantial tool for the business, stockholders, as well as the others who deal with Rainbow Paint Company.
- The liquidity of the company is accurate as established by the current ratio, quick ratio, working capital.
- Current Ratio stands at 2.0
- Quick Ratio stands at 1.0.
- Working Capital stands at $750,000.
The number of days engaged to collect receivables is half of the time taken in selling the inventory.
- Accounts Receivable Turnover stands at 13.3 days
- Number of Days’ Sales in Receivables stands at 27.4 days
- Inventory Turnover stands at 5.67 times.
- Number of Days’ Sales in Inventory stands at 64.4 days.
- In terms of solvency, the company’s position is not very strong as the company is maintaining an equal proportion of debt in comparison to equity.
- Ratio of Fixed Assets to Long-term Liabilities stands at 1.7
- Ratio of Liabilities to Stockholders Equity stands at 1.0.
- Number of Times Interest Earned stands at 6.2
- Number of Times Preferred Dividends Earned stands at 6.1
- The profitability of the company during the year was reasonable, as it was not too high and at the same time not too low. The earnings per share on common stock was $4.10 per share.
- The market performance of the company was also appropriate. The company was able to distribute dividends of $0.90 per share of common stock, and maintain the price-earnings ratio of 6.1.
President’s Letter to Shareholders’
Good afternoon Shareholders,
I trust this letter will find you all well. In the past year our organization has been very active and enclosed you will find the details of the report.
A few points that were concentrated on by the board of directors; in order to reinforce our organization:
- Review and update financial reporting
- Addition of a code of conduct and conflict of interest policy
- Development and revising of an organizational plan
Ultimately, we all agreed that the future of Rainbow Paint Company is very bright and in order to continue the improvement we believe it is essential, to operate as effectively and efficiently as possible. As we head into the upcoming year, we propose to reduce our liabilities and increase our assets. With the implementation of new approaches, we will be able to execute strengthening our balance sheet and generate production growth. Thus, creating more profits on capital and significantly improve shareholder returns, along with a stronger cash flow.
Currently, we have key developments that are proving to be outstanding. The new resources introduced will allow for a long-lasting primer, which is the same color, as the color being applied, allowing for less coats and longer lasting and vibrant colors. We’ve also invented new colors pushing us ahead in the industry and making our brand a household name as well as being the most preferred in most locations around the country. These initiatives are only the beginning of many new initiatives to be applied in the coming year, allowing for a stronger and steadier financial position.
Another initiative to look forward to allows the consumer to create their own personalized colors at the store, as well as the color match to anything they bring in. We have had a trial run and had an outstanding success. We will be rolling out this new initiative, at other store locations later this year, once we have established the necessary equipment in all the localities.
The new year is full of prospective ideals and we are entering it, with the extreme confidence that with the new ideals we will be thriving well into the future. The year 2013 was a great improvement from 2012 and we are looking to be exceptionally strong in future years. We are looking forward in making Rainbow Paint Company the preferred paint for homes and apartments, with reasonable prices and various new colors.
With the new initiatives we are projecting that the first quarter will bring a strong upward style and with the economy gradually steadying we are estimating further growth into the second and third quarters with an outstanding fourth quarter to bring in 2014. Along with the new initiatives, we will continue to improve employee appreciation and contentment. With the initiatives combined with employee improvements and brand expansions, we believe that we will be in a strong financial position throughout 2014 and well into 2015. With employee and customer faithfulness, as well as increasing our mass circulation and delivering to more locations we will be able to accomplish all our goals.
We want to take this opportunity to extend our appreciation to our employees and customers. For without our employee’s enthusiasm and productivity and the loyalty of our customers, we would not have been able to achieve these goals, in 2013. As we roll into 2014, we strive to continue improving employee relations and provide exceptional products and customer service to our customers.
Rainbow Paint Company
Management Discussion & Analysis
The Management’s Discussion and Analysis of Rainbow Paint Company utilizes the key performance measures to monitor the financial health and performance of Rainbow Paint Company’s financial results for the period ended December 31, 2013. The following financial statements and notes to accounts are prepared according to appropriate principles and procedures. All amounts are stated in dollars unless noted otherwise.
The discussion contains a few statements that may be “forward-looking statements”. All reports in the discussion, other than statements of historical facts, are called “forward looking statements,” since we have used what we know and expect today to make a decision about the future. The company trusts that the prospects, existing in forward looking statements are on the basis of rational expectations. The statements do not provide assurance about future presentation and the real outcomes or growth may vary considerably from those stated in forward looking statement.
Forward looking statements contain the terms like: expect, plan, anticipate, budget, and believe or other like terms. Issues that could result in the difference between real outcomes and forward-looking statements contain market prices, guidelines of government concerning chemical usage, sustained accessibility of money, financing and general economic, and market or corporate circumstances. Investors are alerted again that any such reports do not promise the forthcoming performance and that the real outcomes or growth may not be same as those projected in the forward-looking statements.
The growth in the sales in the last few years was reasonably important, but the growth in net income was not proportional to development in sales. The increase in net income was only 16%, whereas the growth in sales was 56%. The rise in expense is due to the rise in interest expense. Therefore, the corporation is scheduled to invest some of its own money and set up the new equipment in the future. This will decrease the budget of manufacturing the products and services in future.
It is projected that cash reserve for the business will rise in future due to growth in sales and therefore the cash dividend is likely to rise in future. The new equipment has been fitted and with this new equipment, a new streak of paint products is anticipated to be announced. This shall be the new line of paint specially made for the newlyweds. This will be announced as environment friendly, easily removable paints which can be used by the newlyweds to decorate their room in different themes. This is anticipated to raise the revenue of the business by 0.3 times.
Rainbow Paint Co.'s comparative financial statements for the years ending December 31, 2013 and 2012 are as follows. The market price of Rainbow Paint Co.'s common stock was $30 on December 31, 1999 and $25 on December 31, 2013 (Accounting).
(Accounting) (Accounting) (Accounting)
2011 Annual Report. (2011). Retrieved March 28, 2014, from Sherwin Williams: http://investors.sherwin-williams.com/pdf/annual-reports/2011_annual_report.pdf
Accounting, A. B. (Ed.). (n.d.). AC499 Unit 4 Rainbow.pdf. Retrieved March 30, 2014, from Kaplan University.
Warren, C. S., Reeve, J. M., & Duchac, J. E. (2012). Financial statement analysis. Mason, Ohio, USA: South-Western Cengage Learning. Retrieved March 28, 2014