It is a financial information company website that provides business news, stock market data, and analysis. It is the subsidiary of Dow Jones and the company the property of the news corp. It is part of the Dow Jones Consumer Media Group and Walls Street Journal. The company normally operates with the stock market simulation and BigCharts.com. It provides a radio update every thirty minutes on its website (marketwatch.com). The company partners with other companies like CBS News and Financial News. It was founded by Larry Kramer and others in 1997.
Financial Performance
The company’s financial performance aims to analyze its financial standing based on its financial statement. This gives the company a general outlook regarding financial progress or decline, and it’s important because it is used in future decision-making. Company daily financial statement is the tool that is; used to calculate financial performance. The table below shows the financial performance table of the market watch company.
Financial performance of the MarketWatch Company from 2015 -2017
| Financial ratio | 2015 | 2016 | 2017 |
| Current ratio | 340.5 | 283.9 | 340.3 |
| Debt to total asset ratio (%) | 2.17 | 5.21 | 2.38 |
| ROA (%) | 18.41 | 16.96 | 16.62 |
| ROE (%) | 23.52 | 22.58 | 21.03 |
The table above shows that the current ratio fluctuated from 2015 to 2017, but the debt-to-the-total asset ratio, return on equity (ROE), and return on asset (ROA) experienced a reduction over three years. However, despite the decline in the company’s financial performance, it was insignificant. Therefore, the company needs to find out the cause of the issue. From 2015 to 2016, the company experienced financial progress, but it dropped in the following year.
Financial Ratio Analysis
| Ratio | 2015 | 2016 | 2017 |
| Gross profit margin (%) | -56.28 | -49.76 | -52.72 |
| Profit margin (%) | 4.45 | 5.16 | 7.22 |
| Return on asset (%) | 2.48 | 2.97 | 3.97 |
| Return on equity (%) | 13.64 | 10.83 | 9.90 |
| Quick Ratio | 0.62 | 0.42 | 0.29 |
| Current Ratio | 1.11 | 1.15 | 1.23 |
| Operating Cash Flow to Current Liabilities | 0.26 | 0.28 | 0.15 |
| Debt Ratio (%) | 73.83 | 73.66 | 73.66 |
| Debt to Equity Ratio (%) | 286.11 | 284.61 | 283.53 |
| Times Interest Earned Ratio | 13.95 | 9.79
|
14.72 |
| Inventory Turnover | 13.97 | 16.04 | 17.82 |
| Accounts Receivable Turnover | 3.42 | 5.34 | 10.12 |
| Asset Turnover | 0.52 | 0.54 | 0.49 |
A financial ratio is calculated from the current financial status of the company. It is used to analyze a company’s financial health and its potential. The ratios are calculated to form the daily financial record of the company. The following are the financial ratios to be analyzed based on the MarketWatch company.
Liquidity ratios: the company can cover at its expense. It is categorized into a current ratio and a quick ratio. The current and quick ratios of the company declined in 2016 and then increased in 2017.
Operating ratios are the ratios that are used to measure the efficiency of the company’s operation. This ratio includes inventory turnover ratio, return on asset, receivable ratio, and sales ratio. The company experienced increased sales, receivables, and returns on assets over the three years. This shows that the company experienced increased revenue due to increased sales.
Solvency ratios are the ratio that measures the stability of the company and the company’s ability to pay back its debts. It indicates the financial health of the company. Solvency ratios include debt ratio, working capital, and net sale on the working capital. The company experienced a decreased debt ratio, and there has been an increase in working capital, showing that it can withstand its debts. For the last three years, the company has experienced a revenue increase. This shows that there has been progress in the Marketwatch company business over the last three years.
According to financial and performance records, Marketwatch Company is currently stable in its business. The issue that may affect its operation is the big debt seen in its financial record. However, for the last three years, I have analyzed the decrease in the percentage of debt and the increase in working capital. This shows that the company is stable enough to operate smoothly and can pay for its debt.
Return On Equity
It is the amount of the net income returned as the percentage of the shareholders’ equity. It reveals the corporation’s profitability on the capital the company generates from the shareholders’ investment. Therefore, return on equity equals the net income and shareholders’ equity division. That is
ROE=net income/shareholder equity.
The other ways to determine ROE are as follows.
=Net profit margin x Total assets turnover x Equity multiplier
= Net income/Sales x Sales/Total assets x Total assets/Common Equity
According to the MarketWatch company financial statement, the balance sheet in millions
The total asset is equal to 29010.
Common equity is equal to 3889
Net profit is equal to 1736
Sales are equal to 6288
Therefore, ROE= Net income/Sales x Sales/Total assets x Total assets/Common Equity
ROE = 1736/6288 x 6288 / 29010 x 29010 /3889
=0.45
ROE is one of the profitability ratios that measure the ability of the company to produce a profit from the investment from the shareholders. Therefore, ROE shows the profit generated by the shareholders of the MarketWatch company’s investment. It also shows how effectively the company’s management uses the invested capital to fund the growth and operation of the MarketWatch company. In this case, the company generates a return on equity of O.45. This is a low ROE to the investor. This shows that the investors get very little from their investments. To improve this, the management of the MarketWatch company should identify ways to improve its operation that will lead to an increase in sales so that its revenue generation can increase. One of the ways management should do this is to reduce operation costs by reducing expenditure costs. Also, the company should innovate to expand its market and sales. The proper marketing of the company will do this on the market. Also, identify and analyze the weaknesses and strengths of its competitors and build a strong foundation that will outdo them in the market. This will be done by developing good relationships with the customer and general public and ensuring that the products the company delivers on the market are of higher quality. This will shift the customers from its competitors to Marketwatch company’s products. Hence, it will increase its sales and revenue generation, thus, the return on the equity will be high to investors.
The company’s expenditure for the last annual year report is $ 165.00 million. The company’s expenditures include the depreciation of the assets, daily expenditures, and taxes to the government.
Beta value is used to measure the risk of the stock in case it is included in a well-diversified portfolio. It is predictable for MarketWatch company beta value on the market. This is so because its position on the market normally fluctuates. At another moment, the beta value is 1%. At this time the company experiences an increase in sales and when it’s below one percent, the company experiences a decrease in sales.
Stock Analysis
Table for sales flow for three years in millions
| products | 2015 | 2016 | 2017 |
| Adverts | 53 | 56 | 57 |
| news | 30 | 32 | 29 |
| Promotion | 41 | 43 | 39 |
The product sale of MarketWatch fluctuates over time. For three years, the advert section provided the company with higher revenue than other products. But there was no constant increase in sales. The company experienced increases in sales from 2015 to 2016, but there was a relative decrease in sales from 2016 to 2017. This shows that some factors led to a decrease in sales. Some of the factors that may lead to a reduction in sales are stiff competition in the market from competitors, the decrease in the demand for the services provided by the company on the market, and the influence of the government through taxation and regulation policies. Therefore, it is important for the company to benchmark its performance on the market and improve its products, which will increase revenue generation. Also, the company should innovate ways to increase its sales by employing modern operation methods and improving the technology system of operation. Improve its marketing strategy to promote the company’s product on the market.
Marketwatch Company is one of the old company the field of social media and communication. Since its embellishment, the company has grown steadily. The company is aware of the market and its weaknesses for this duration. Therefore, I recommend that the company recruit a more skillful individual who can change the company’s operations and improve its performance. Improving the production of the company. The company should evaluate the individual performance and the department’s performance. The company should develop a strategy with a mission, objective, and goals to improve the performance of the company and increase its sales, thus increasing revenue and profit generation.
Another strategy that the company should consider is the marketing strategy. The company should develop a marketing strategy that will increase the company’s awareness of the market. This will be done through the effective use of social media, creating good public relations with society, and handling customer complaints with great care to improve its operation quality. Customer complaints should be used to improve the quality of the company’s product to its customers.
