BNL STORES Harvard Case Solution & Analysis

BNL STORES CASE SOLUTION

QUESTION: 1

RATIO ANALYSIS:

Financial ratios have been calculated for the years 2008 to 2010. These ratios will help to analyze the financial condition of the BNL Stores. Following are the ratios and their analysis:
Profitability ratios

bnl stores case solution

bnl stores case solution

Net profit margin:

The net profit margin of the company is decreasing constantly from 2005 to 2009; the net margin decreased by 2.44% in this five year period. In 2010 the net margin of the company became negative -12%, due to net loss of the company in 2010. This shows that the company’s financial position is facing problems and has decreased its ability to generate enough revenues to make net profits.

Return on equity:

The ROE of the company is also decreasing constantly from 2005 to 2008 with slight increase in the ROE of 2008 and then significant drop in the ROE, which decreases it by 3% in 2009 just one year. In 2010, the net margin of the company became negative by -183%, due to net loss of the company in 2010. This shows that the net loss amount of the company is higher than the equity of the company.

Return on assets:

The ROA of the company is decreasing constantly from 2004 to 2009; the ROA is decreased by 7.85%% in this six year period. In 2010, the ROA of the company became negative -19%, due to net loss of the company in 2010. This shows that the company’s assets have failed to generate profit for the company.

Turnover ratios

Receivables Days:

The receivables turnover is the receivables over the sales of the company. The receivables turnover is increasing from 2005 to 2008.The receivables days have been decreased slightly in 2009 to 106 days and the 89 days in the year 2010, and this is due to the decrease in the receivables from prior year.....................

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