Intuit Inc Financial Assessment
The company chosen for the purpose of this project is the Intuit Inc. This is a technology company founded in 1984, with headquarters in California. Intuit Inc. is a provider of that seeks to provide financial management and innovative solutions to its customers who are the SME’s Accounting professionals and financial institutions. Intuit Inc. provides solution to its customers on significant business problems such as income tax filling, digital banking solutions to financial institutions by providing products such as Quickbooks, Turbo tax and Quicken (Intuit Inc, 2014). Intuit Inc. ...view middle of the document...
The other factor that drives the decision to invest in Intuit Inc is its ability to earn sustained net income overtime. The net income of the company can be determined as revenues less the costs used to generate the revenue and are based on the company operations during a fiscal year (Ehrhardt & Brigham, 2011). Profit levels are a short –term measure of wealth maximization to a company and are a determinant of resources available for reinvestment into the company’s profitable projects as well as distribution of dividend to its shareholders. Based on the financial statements of the company, for the year ended July 2014, the company had net profit of 907 million (Intuit Inc, 2014) compared to 858 million in 2013 (Intuit Inc , 2015), which was an increase of 5.71% from the previous year’s amounts. The company also has a relatively high profit margin with an average margin of 20% from 2011 to 2014.
Complete ratio analysis
Current ratio is a liquidity ratio, that is, it helps determine whether is able to meet its short –term debt obligation. It can be described as a ratio that helps an investor determine whether a company is able to meet its short-term financial obligations from the value of its current liabilities (Pierre , Pascal, Yann , & Antonio, 2005). The formula of calculating current ratio is current assets divided by the current liabilities. Companies with a current ratio of more than 1 are preferable as it means that all its current liabilities have been current by the current assets. From the calculations attached, the company had a ratio of 1.84 in 2014 (Intuit Inc , 2015) and 1.87 in 2013 (Intuit Inc, 2014). These ratios are higher than 1, implying that Intuit Inc has been able to meet its current liabilities from current assets over the three years.
Acid – test – ratio is helps an investor measure the ability of an organization to converts its current assets into cash at a short notice and pay off the current liabilities (Wild, Shaw, & Chiappetta, 2011). The formula of calculating acid –test –ratio is (cash + short –term investments + current receivables divided by the current liabilities). The preferable ratio for acid –test ratio is 1, that is, all current liabilities can be met with current assets that can be converted into cash within a short notice. Based on the calculations attached, the acid –test ratio of the company has been calculated to be 1.44 in 2014 and 1.40 in 2013. This shows that the company has a stronger liquidity position and that all currents that are easily convertible to cash were sufficient to repay the current liabilities hence strength to the company’s financial health.
Market Value Ratios
Price Earnings ratio is the ratio of a company’s market share price to its earnings per share. It enables an investor determine the prospective company’s earnings potential, future growth and the volatility from his/her point of view (Wild, Shaw, & Chiappetta, 2011). The P/E ratio can be...