Adc Telecommunications Financial Ratio Analasis Essays -

Adc Telecommunications Financial Ratio Analasis Accounting 6000 Financial Statement Analysis ADC Telecommunications October 29, 2000 Corporate Background ADC Telecommunications (ADCT) is a communication equipment manufacturer located in Minneapolis, Minnesota, USA. Since 1952, the company has successfully weathered the tumultuous transformation process of technology. Today, ADC Telecommunications exclusively focuses on manufacturing computer-networking equipment. Increasing demand for fiber optic transmission systems like asynchronous transfer mode (ATM), synchronous optical networks (SONET) and most wireless communications systems, provide significant opportunities for ADCT. The company currently focuses on enabling communications service providers to deliver high-speed services to residential and commercial customers. The following is an annual analysis of ADCT's financial ratios of years 1995-1999. Overall Performance Measures The averaged price/earnings (P/E) ratios for ADCT are 36, 36.3, 39.4, 27.5, and 64.1 for years 1995-1999 respectively. The P/E ratio for ADCT is very stable from 1995 to 1997. In 1998, the P/E ratio fell over 43% to 27.5. The P/E ratio then rocketed to 64.1 in 1999, a 57% increase in one year. This dramatic increase indicates current investors are placing more value on future earnings as compared to previous years. One-reason ADCT investors pay more to own the stock is the growth potential in the communication equipment sector. For example, Internet traffic doubles every 100 days, illustrating the growth potential for ADCT's sales and bottom line earnings (Annual Report, 1999). Investors are currently willing to buy the stock at an inflated price due to two main reasons, the company's future earning potential and present growth rate in the industry. The returns on assets (ROA) ratios for ADCT are 9.20%, 11.40%, 11.60%, 11.30% and 5.20 for the years 1995-1999. There were no ROA industry averages in the Almanac of Business and Financial Ratios, written by Leo Troy. ADCT's ROA ratios remain constant (around11%) from 1995 -1998. In 1999, ROA dropped 54% to 5.20. This decline indicates that ADCT may not be utilizing its assets properly. One explanation for the 1999 decrease is ADCT's acquisitions. For example, ADCT purchased Broadband Access Systems for 2.25 billion exchange of stock (Datek, 2000). Recent acquisitions require additional long-term debt and are reflected in the ROA reduction in 1999. However, this trend is recent and may be viewed only as a temporary adjustment until the 2000 financial statements are released. There were no return on shareholders equity (ROE) industry averages in the Almanac of Business and Financial Ratios, written by Leo Troy. ADCT's ROE ratios are 10.8%, 14.2%, 14.5%, 16.0% and 7.0% for the years of 1995-1999 respectively. One notable trend in the ROE ratios is the 56% drop from 1998 to 1999. One explanation for this is found on ADCT's income statement. There is a significant drop in net income in 1999 verses 1998. Non-reoccurring charges were 148,977,000 and 9,168,000 for years 1999 and 1998 respectively. These increased expansion costs decrease net income, thus reducing the ROE ratio for 1999. ADCT must focus on revenue generation from these recent acquisitions to improve the return on shareholders equity. This recent drop in ROE needs to be compared to 2000 ROE ratios to provide a more complete picture of future returns for ADCT investors. Profitability Measures The gross margin percentages for ADCT are 52.5%, 50.4%, 50.0%, 50.5% and 51.7% for the years 1995-1999. The industry comparisons of gross margin averages are 43.1%, 40.3%, 41.2%, 40.4% and 40.6% for the same years. One noticeable difference is ADCT's gross margin percentages are consistently 10% higher than industry comparisons. One reason for exceptional gross margin performance is ADCT's sales mixes, sales volume, lower component costs and consolidation through acquisitions. ADCT's gross margin is 10 percent higher than the industry average, illustrating another aspect of the company's high profitability. ADCT's profit margins are 9.4%, 10.6, 9.3, 10.6 and 4.5 for 1995-1999 respectively. There were no profit margin industry averages in the Almanac of Business and Financial Ratios, written by Leo Troy. Profit Margins have remained stable at 10% until a 1999-drop to 4.5%. This sudden drop in 1999 can be attributed to the previously mentioned decrease in net income in 1999 due to non-reoccurring charges. This drop in 1999 can be viewed as a temporary decline until compared to the 2000 financial statements for ADCT. Earnings per share (EPS) for ADCT are $.45, .69, .90, 1.16 and .58 for

How to Write a Sample Essay on the Biggest Challenge in the College

How to Write a Sample Essay on the Biggest Challenge in the CollegeYou can write a sample essay on the biggest challenge in the college. It can give you good ideas to write a good description. For example, if you are doing business in a college then you need to relate it to the student's concerns. So you need to provide the basic requirements of that college.But when it comes to college students, they do not have a proper knowledge on basic questions and they look for something more so that can satisfy their academic abilities. In addition, you need to include the things like work, studies, school, time and deadlines. So this is why you need to write a sample essay on the biggest challenge in the college.So you need to know how your college students are doing and also study them, which means giving details about the problems they are having. So now, you can write a sample essay on the biggest challenge in the college. But remember that it needs to be really descriptive.So to show the m what you are talking about, you can list some of the examples of the difficulties and challenges that they have and you can provide them with the solutions. Then you can say what the college should do. In that way, they can understand what you are talking about.So you need to start writing the first few sentences, where you will list the time frames of the classes, the number of students, etc. You need to be accurate in the details, but at the same time you need to write that because this is how the college students can understand what the problem is.Besides the time frames, you can also include the syllabus of the college. Theses are important because they are the basis of the success of the students in the whole college. Then you can include some of the things that you do every day and how you learn.Just by reading the above, you can see that it can give you a good idea on how you can write a sample essay on the biggest challenge in the college. You can compare it with your expe riences in the college. Then you can start writing the thesis statement and the conclusion.