Quantitative Business Analysis Help

To support your work, use scholarly sources and outside sources. As in all assignments, cite your sources in your work and provide references for the citations in APA format.

Part 1 Measuring Responses

In Part I, a company’s cereal is not selling well. You have to create a 10–15-question survey that measures customers’ preferences for the company’s cereal product

In the present business environment, the best decisions are the ones that are informed decisions. Such decisions are based on collecting and analyzing good data. In order to properly measure, for example, the customers’ preferences regarding a product, it is important for a survey to ask the correct questions and in the correct manner.

Now what type of questions you will use to measure the preference is the crux of the assignment. Think about all the questions you need to ask when you are trying to determine customer-buying decisions about a product (taste, price, other products, etc.). Additionally you need to answer the following questions:

· How many scale items will you put in the survey? Justify your answer.

· Will you use multiple-choice questions? Why or why not?

· How many scale items will you use in the survey?

· Why did you select that number of scale items?

· How many scale points will you use in the survey? Justify your answer.

· What data type will be used in the survey? Justify your answer.

Part 2 Obtaining Results from a Survey

In Part II, you have to create a set of survey questions, assuming that you sell cars. You are attempting to measure how customers perceive the quality of the cars that you sell. 

Surveys are a good tool for collecting valuable information, if designed and implemented properly.

It is important that a survey provide valuable results. Make sure you create three survey questions (with justification) each for simple category scales, multiple-choice single-response scales, multiple-choice multiple-response scales and Likert scale summated ratings.

It is important that a survey provide valuable results.

The Home Depot Inc. Ratio Analysis

Matthew Roewer

Argosy University

Module 1, Assignment 3

10/06/2015

Introduction

The Home Depot, Inc. is a home improvement retailer.

It deals sells home improvement products and building materials.

It operates The Home Depot stores.

Listed in NYSE in 1984.

Trades as HD in New York Stock Exchange.

Ratio Analysis-Liquidity Ratios

Current Ratio

Refers to current assets divided by current liabilities.

As at 2/1/2015, the current ratio was 1.36.

The current ratio as at 2/2/2014 was 1.42

Quick Ratio/Acid Test Ratio

Indicates the company’s short term liquidity.

Quick Ratio =(Current assets-Inventories)/Current liabilities

As at 2/1/2015, the quick ratio was 0.37.

As at 2/2/2014, the quick ratio was 0.39.

Current ratio is a tool used in finance to measure if the enterprise has enough resources to meet its debts over the following 12 months. Quick ratio is a measure of the ability of the company to meet its short-term obligations using the most liquid assets. This ratio, therefore, excludes the inventories from current assets. It is also referred to as acid ratio test ratio (Tamari, 2010)

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Liquidity Ratios Cont’d

It is a liquidity ratio

Cash Ratio = (Cash + Cash equivalents)/Total current Liabilities

As at 2/1/2015, the cash ratio was 0.15 while as at 2/2/2014, the cash ratio was at 0.18.

Cash Ratio

Cash ratio is majorly used to measure liquidity of the company. It can determine, therefore, how faster the firm can repay its short term liabilities. A strong cash ratio can be used by creditors when deciding the amount of debt they are willing to extend to the party in need (Palepu & Healy, 2014).

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Profitability Ratios

Gross Margin

It is a profitability ratio calculated by dividing the gross profit by revenue.

For the period ending 2/1/2015, the gross margin was at 35%.

The gross margin was at 35% also for the period ending 2/2/2014.

Operating Margin

Calculated by dividing he operating expenses by revenue

For the period ending 2/1/2015, the operating margin was 13%

For the period ending 2/2/2014, the operating margin was 12%

Gross margin refers to the total sales revenues less its costs of goods sold of a company divide by the total sales revenue. The higher this percentage, the more amount the firm retains on each dollar of sales used to service its other obligations and costs. Operating margin is one of the measures of profitability. It gives an indication of how much of each dollar of revenues that is left after the operating expenses and costs of goods sold are all considered (Tamari, 2010)

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Profitability Ratios Cont’d

Pre-Tax Margin

For the period ending 2/1/2015, the pre-tax margin was 12%

For the period ending 2/2/2015, the pre-tax margin was 11%.

Profit Margin

Refers to the ratio of profits earned to the total assets over some defined period.

For the period ending 2/1/2015, the operating margin was 8%.

For the period ending 2/2/2014, the operating margin was 7%.

Profit margin is a measure used to gauge the firm’s financial health. It is the ratio of profits earned to the total assets. Pre-tax profit margin considers the profits of a company and all expenses EXCEPT taxes. Through this, the company can be prevented from using tax breaks to influence the company’s profit margin (Tamari, 2010).

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Profitability Ratios Cont’d

Pre-Tax ROE

Refers to the ratio of the pre-tax profit and the total equity average

For the period ending 2/1/2015, the pre-tax ROE was 107%

For the period ending 2/2/2014, the pre-tax ROE was 68%

After-Tax ROE

Refers to the ratio of net income after tax and the average shareholder’s equity.

For the period ending 2/1/2015, the After-Tax ROE was 68% while for the period ending 2/2/2014, the After-Tax ROE stood at 43%

Return On Equity (ROE) is one of the most important financial ratio used to measure profitability. It is a measure of the profitability of a corporation. It reveals the amount of profit that a company generates using the money that shareholders have invested in the company (Palepu & Healy, 2014).

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Conclusions from the Ratios

Liquidity Ratios

Current ratios for both 2013 and 2014 are both more than 1.The company can, therefore, meet its debt in the next 12months. 2014, however, was better than 2013 (1.36 to 1.42)

Since quick ratios are less than 1, the company cannot currently meet its current obligations using liquid assets.

Cash ratios for both years are less than 0.2. This is acceptable.

Profitability Ratios

Gross margin for both years remained at 13% while there was a slight increase in 2014 to 13% from 12% in operating margin.

Higher values of ROE are favourable. This means that the period ending 2/1/2015 was better than that ending 2/2/2014.

2014 Sustainable Growth Rate

Sustainable Growth Rate (SGR) = ROE * (1 – dividend-payout Ratio)

= 0.3235 * (1 – 0.4128)

SGR = 0.1899

= 19%.

This is a good sustainable growth rate for the company.

Sustainable Growth Rate, SGR, refers to the realistically attainable growth that an enterprise can maintain without running into problems. It is the maximum growth rate that a company can sustain without the need for it to increase its financial leverage. In calculation of the Sustainable Growth Rate, one must know the Return On Equity (ROE) of the company as well as its dividend-payout ratio (Palepu & Healy, 2014).

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References

Palepu, K., & Healy, P. (2014). Business analysis & valuation: Using financial statements : Text and cases (5th ed.). Mason, Ohio: South-Western.

Retrieved from https:// ycharts.com/companies/HD/key_stats

Tamari, M. (2010). Financial ratios: Analysis and prediction. London: P. Elek.

The Home Depot: 2014 annual report. (2014). Atlanta, GA.: The Home Depot.

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