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Subaru Financial Case

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Returns on assets, equity, and capital, gross, and SG&A margins, current and quick ratios, total debt/equity, total revenue and gross profit are all parts of a large financial picture that will give us an estimate of the health of a company. Subaru is the eighth largest auto manufacturer in the United States and has carved out a reputation for being a reliable car with legendary all-wheel drive and longevity. Evaluating Subaru’s financial statements gives us a picture of a strong company that is performing exceedingly well given the current market that is geared towards trucks and SUV’s. Subaru will remain a strong competitor well into the future if they remain innovative and aware of changes in the market. Return on assets is the net income divided by the total assets. According to Morningstar Subaru has …show more content…

Short-term assets are those that a company has the ability to turn into cash within 90 days. Subaru currently has a 1.30 ratio, followed by Ford at 1.08 and GM at .86, which is not currently the best outlook for GM. Similar in nature to the current ratio a positive number indicates positive liquidity and is a good sign for investors. Total debt and equity allows us to analyze how much debt compared to the equity that is available. The formula is simple, we take the total debt divided by the total equity and this gives us a ratio that we can use to determine if a company has an excess amount of debt compared to other companies within the industry (Hill, 2017). Subaru has a debt to equity ratio of .02, Ford at 4.42, and GM at 2.69. Ford having a high debt/equity ratio can indicate a large amount of debt being taken on to increase operations and increase its profitability. Subaru having a ratio of almost zero tells us that they are not taking on a lot of debt, which is a great sign for

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Comprehensive Analysis Liquidity Liquidity is defined as the ability to convert assets quickly into to cash (Liquidity, 2014). A good standing liquidity is good for companies as well as investors and lenders to the company. For the company it’s a great indication as to whether it will meet short term maturing obligations or not. For creditors and investors, a good standing liquidity portrays the ability of how quick a company can pay off debts. Current Ratio (Current assets ÷ Current liabilities)

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Common liquidity ratios are the current ratio and the quick ratio. The current ratio is calculated by dividing current assets by current liabilities. This can help a business help pay off debt. "As a quick ratio is a liquidity ratio that measures the ability of a company to pay its current liabilities when they come due with only quick assets. Quick assets are current assets that can be converted to cash within 90 days or in the short-term.

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Sally’s Beauty Holding, Inc., who has a current ratio of 2.4, is quicker to turn their current asset into cash but also is not investing excess assets. Both companies are able to meet their debt obligations. On the other hand, Coty’s Inc. current liabilities exceeds their current assets revealing their current ratio to be .94. Having a ratio below one can imply that current assets are barely being covered by the current liabilities. Ulta Beauty’s debt-to-equity is estimated to be .65, which reveals Ulta Beauty to have a low risk and not using high amounts of debt to finance operations, because total liabilities is $1,001,660 and total shareholders’ equity is $1,550,218.

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The current ratio is the best way to assess the ability of a company’s capabilities to pay off its short term liabilities with short term assets.

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The debt to ratio is a ratio that compares a firms total liabilities and shareholders’ equity. It shows the proportion of the amount of money invested by the business owners as well as external entities. Debt to Equity Ratio = Total Liabilities/Shareholders’ Equity = $80,994/$931,490

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The debt to equity ratio is lower in 2009 compared to 2008. This is because the company borrowed less from financial firms in 2009, compared to 2008. Although the funds acquired from debts help in operations and expansion, such as increasing the total purchases made, they increase the amount the company loses in form of interests to financial institutions. Due to the company’s decision to reduce the rate of borrowings made, the current result is that the company will experience a reduction in its total purchases and sales. However, there is an anticipated benefit in the future, since the company will lose less in form of

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The full swing production of the automobiles started in 1983. Initially the Indian government had a major stake of the company with around 70%. Now, the Japanese Counterpart Suzuki holds majority stakes of the company.

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