Financial Analysis of Stampcrete

Stampcrete is a global company owned by P. Michael Fennessy. It regularly makes long-standing landmark on the world of decorative paving.  The company has been the sole maker of the stamping types of equipment it develops in the ornamental sector for more than four decades (Stampcrete International Limited). The principal shareholder, P Michael is an American innovator with disability stamp that is utilized to make truncated domes on transport platforms and reduce the cuts on the always.  Therefore, this essay evaluates the business performance of the Stampcrete for the financial year 2005 and 2006.

Financial Ratios

Ratio

Formula

FYR

2005

FYR 2004

Liquidity Ratios

Current Ratio

Current assets / current liabilities

1,081,033/250,598

=4.31

1,364,697/193,281

= 7.0

Quick Ratio

Total current assets – inventory / current liabilities

1,081,033-323,280/250,598

=3.02

1,364,697-421,855/193,281

=4.87

Operating Ratios

Formula

FYR

2005

FYR 2004

Inventory Turnover

Cost of goods sold/average inventory

2,505,602/323,280

=7.75

3,479,024/421,855

=8.25

Return Assets Ratios

Net income / average assets

1,142,933/1,081,033

=1.06

1,147,665/1,364,697

=0.841

Solvency Ratios

Formula      

FYR

2005

FYR 2004

Working Capital

Current assets-current liabilities

1,081,033-250,598

=830,435

1,364,697-193,281

=1,171,416

Net Sales To Working Capital

Net sales / working capital

6,417,965/830,435

= 7.73

7,413,585/1,171,416

=6.33

Other Ratios

Ratio

Formula

FYR 2005

FYR 2006

CAGR of Revenue

Ending Value/Beginning Value (1/no.years)-1

7,318/5,082 1/3 – 1

1.439998-1

=0.43998

=44%

EBITDA/Interest

1,562/140

=11.16

1,499/8,896

=16.85  

Debt/Equity

540,058/1,726,980

= 31.27%

484,446/2,162,439

= 22.40%

Debt/Capitalize

540,058/2,556,636

=21.12%

484,446/2,844,666

=17.03%

Analysis

Stampcrete International Limited managed to grow its portfolio for fiscal 2004 to 2006 by 44 percent. It is, therefore, a clear indicator that the company is expanding its decorative business. Consequently, Stampcrete debt reduced from 31.2 percent in 2005 to 22.40 percent in the fiscal year 2006 showing that it is becoming financially independent because of its booming business. Moreover, the earnings before interest and tax increased from 1,562 in 2005 to 1,499 therefore, implying that the revenues of the Stampcrete increased between the financial years 2005 to 2006.  Typically, be considering the percentage of the debt to total capitalization of the company, it is evident that Stampede has well leveraged and there no indicators that this corporation will face liquidity issues. Also, this indicates that the company is in a position to meet its short-term obligations

The Company’s Valuation

Stampcrete revenues stand at 44 percent which is approximately 900,000 pounds and is contributed by the sale of products such as stamping tools 23 percent, the sale of color hardeners 15 percent, patina, and color- seals 14 percent and licensing fees 4 percent. The significant portion of the sales profits is driven by the products such as slate m brick, natural materials that are used for the residential and commercial purpose.  Moreover, the sales in the entire region of the United States amounted to 40 percent of the corporation’s overall revenues followed by the Midwest at 25 percent, Mid – Atlantic 20 percent, south 10 percent and Western regions 5 percent.  The company has a team of the 21 full-time sales professionals that market the products to international level hence higher profits.

Stampcrete International has the total of 2000 shares inclusive of its affiliate branches with the total value of 37, 485 million dollars. The total debt for the company for the two financial years 2005 and 2006 stood at $ 484,446 and $ 540,058 respectively. Comparing these debts to the total capitalization of the company it is clear that the debt level is manageable since the total capitalization for the Stampcrete for the two fiscal years was $ 2,556,636 and 2,840,666 respectively. The statement of financial position shows that the total value of the company’s assets in the period between 2005 and 2006 increased from $ 1,433,557 to $ 1,457,715 respectively. Moreover, the company also secured the mortgage between the above periods and increased its investment in warehouses, purchase of equipment and lease of land for the commercial purposes that expanded the company’s portfolio.

Work Cited

Stampcrete International Limited. History of the company 2018. Retrieved from