Investigating The Profitability, Liquidity And The Solvency Of Xerox 's Performance

Profitability ratio Earnings Per Share Book Value per Share Profit margin on sales Return on assets Return on shareholders’ equity Return on Investment: DuPont Model (ROI) Liquidity Ratio Current ratio Quick ratio (acid test) Working Capital 2009 2008 2007

Accounts payable days saw a major increase going from 49 days in ’93, to 65 days in ’94. Although Wiegandt has been flexible with credit terms, Baum is far exceeding the net 30 terms and is not taking advantage of any discounts.

Financial leverage is the ability of the company to maneuver with financing options to meet the obligations (Investopedia, 2012). There are two leverage ratios that were analyzed for this financial statement 1) debt ratio and 2) debt-to-equity ratio.

Days Accounts Receivable: Hertz managed to decrease this ratio by 12% over the time frame, meaning they are decreasing the days taken to get their receivables, which is great since their AR turnover increased.

Answer: Aging schedules definitely help a company keep track of which of its customers are paying on time, and are useful in figuring cash flow. In this case, it is apparent that the majority of accounts receivable by the end of March are less than 30 days old (80.8%). By the end of June, that percentage goes down to 63.7%. By the end of March, 19.2% of accounts receivable are between 30-60 days old, and by the end of June, there is 36.3%. 0% of accounts receivable get to be over 60 days old, which indicates payment.

The return on shareholders’ fund, capital employed, total assets all have gone down during this period. The ability of the company to pay its short term debt hasn’t varied much, but the administrative expenses have gone up by a very large amount.

When combining the figures for ROE, ROA and the DuPont analysis it appears that the company is using leverage favourably. ROE is greater than ROA and assets are greater than equity. This is a positive sign for shareholders as it suggests a good investment return in a company that is managing its shareholder equity well (Evans & McDowell, 2009).

So while the company increased its net income, it has done so with diminishing profit margins.

| The ROE decreased in the last year but still in the good margin of profitability.

Allowance for doubtful debts however increased by 0.03% in the fiscal year ending 2015. This was followed by a drop in net accounts receivables in 2015 by 0.09%, due to the changes in the account receivables accounts.

11. Accounts receivable turnover and days sales in accounts receivable for the last three years:

Generally speaking, the shorter of the A/R turnover in days, the better efficiency of current capital. But the data of this firm is higher than the industry average level, it indicates there is an inefficient use of current capital and a problem of management, especially in 2001.But it started dropping dramatically in 2002 which reflects an obviously improvement of management.

Clearly, Net profit margin is decreased in 1994. In 1992 it was the highest then it is showing downward trend. It is the only cause which is lowering Return over Equity (ROE).

Xerox also used the sales type lease as immediate revenue, they also claimed it was impracticable to estimate the fair value of the equipment. Xerox used “Return on Equity” (ROE) and “Margin normalization” In 1997 Xerox confronted more difficulty in meeting expectations, the company used ROE broadly. It also used margin normalization in Europe, Brazil and other Latin American offices.

Financial Research – The Xerox and to make the current profit targets meet with Wall Street's expectations. In addition, Xerox specifically adopted the measures of "return on equity" and "profits standardized" to