Financial Comparison Of Andrews And Baldwin Company

During round 7, Andrews and Baldwin were all progressive in as there was no decrease in ROE, profits, and equity, a sign both companies managed the shareholders equity efficiently to convert their equities into profits. In round eight, equity for both companies decreased just like all the competitors except two. From the progressive increase in ROE shows Andrews how was effectively and efficiently was able to convert the equity from the shareholders to generate profits and grow Andrews Company (Investopedia, 2016). From the tables of rounds 6, 7, and 8, Andrews significantly showed it was the leader of all competitors as far as return on equity was concerned.

Round 6 Competitions

Competitors Andrews Baldwin Chester Digby Erie Ferris

ROS 15.8% 3.9% -2.8% 5.9% 11.8% -0.6%

Financial Statistic Graph for

It is calculated by evaluating the total assets/equity. Using the leverage 1.7 in round 6 for Andrews for an instance means for every $1.7 of assets, there is $1 of equity. The equity in the form of investments from shareholders in the same round was $96,240,000. Also, $43,500,000 long term debt funding was borrowed making the company stronger in investment opportunity to the shareholders with $139,740,000. The ratio relates to ROA and ROE but is differentiated from each order. Both of them provide the X-ray of the management’s effectiveness in running a company.ROA is a measurement that gives clue to the investors on how well a company uses its assets to generate more income to the shareholders while ROE gives an insight measurement managers are generating income from the shareholders’ investments (Investopedia, 2016). With sound ROA, the debt levels are moderate while solid ROA is a sign managers are working out profits from investments. To Andrews Company, it provided adequate security to its creditors over the thrust of their capital. Using the long –term debt, as the cases in the six round of the simulation, Andrews utilized the financial leverage to affect increase in the shareholders’ equity. Relating to debt and equity ratios, debt is related to financial leverage which can increase returns to shareholders and is expressed