Comparing Companies Assignment
The companies that I chose to compare are Strum Ruger & Co (RGR), Smith and Wesson (SWHC), and Orbital ATK (OA). These companies all compete in the Aerospace and Defense Industry. More specifically, RGR and SWHC primarily produce civilian firearms while OA produces military firearms and civilian ammunition. I chose these companies because I was curious about how they are performing given the recent mass shooting that have occurred over the past few years and the impending legislation changes. Below is what I found.
| RGR | SWHC | OA |
Income x Employee | 18.634 k | 28,489 k | 6,296 k |
Revenue x Employee | 262.65 k | 315,530 k | 258,046 k |
Receivable Turnover | 9.3 | 9.53 | 1.92 |
Inventory Turnover | 8.22 | 3.76 | 8.39 |
Asset Turnover | 2.05 | 1.26 | .56 |
Which company appears to have the most productive employees?
The company with the most productive employees is SWHC. Out of the three ...view middle of the document...
Which company is most efficient in its use of credit?
SWHC is the company that is most efficient with its credit because it has the highest Receivable Turnover Ratio. This ratio measures net credit sales over average accounts receivable. Therefore, the higher the ratio, the quicker a company is able to collect on credit issued to its customers.
Which company makes the best use of its facility and equipment assets?
RGR is the company that makes best use of its facility and equipment assets because its Asset Turnover Ratio is the highest among the companies compared. This ratio measures revenue over assets. Therefore, a higher ratio indicates that the company is earning more revenue per assets. RGR’s ratio is nearly double that of the nearest compared competitor.
After pulling ratios and researching the three companies (SWHC, RGR, and OA) I have developed a few insights. First, Smith and Wesson has by far the most productive employees. Their employees are producing revenue and income at much higher levels than the competition. However, when it comes to turning over their inventory and using their assets efficiently, they fall behind their competitors drastically. This is easily explained when compared against OA because OA focuses primarily on military defense systems and commercial ammunition while SWHC primarily sells civilian firearms. However, when compared to another company that sells similar products, RGR, SWHC still has much lower ratios. It is possible that this is because SWHC is a fairly new company, it was founded in 1991 while RGR was founded 1949. Therefore, one can assume that RGR has established assets and retailer partnerships that help it develop these ratios. Another insight I observed is that RGR’s Asset Turnover Ratio is by far the highest of the three companies I compared. RGR’s ratio almost doubles SWHCs ratio and is five times higher than OAs. Once again, I believe this is due to RGR being the older company. Being in this industry for the amount of time they have lends itself to having established the necessary assets to excel in this industry. These established assets are helping produce higher revenues while the other companies are having to develop similar assets while earning revenue.