MarketWatch Company Analysis
It is financial information company website which provides business news, stock market data, and analysis. It is the subsidiary of the Dow Jones and company the property of the news corp. It is part of the Dow Jones Consumer Media Group along with Walls Street Journal. The company normally operate with the stock market simulation and the BigCharts.com. It provides radio update for every thirty minutes on its website (marketwatch.com). The company operates in the partnership with other company like CBS news and financial news. It was found by the Larry Kramer and other in 1997.
- Financial performance
Financial performance of the company aims at analyzing the financial standing of the company base to its financial statement. This gives a general outlook of the company in term of 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. Below table shows financial performance table of the market watch company.
Financial performance of the MarketWatch Company from 2015 -2017
|Debt to total asset ratio (%)||2.17||5.21||2.38|
The table above shows that current ratio fluctuates from 2015 to 2017 but the debt to the total asset ratio, return on equity (ROE) and return on asset (ROA) experience reduction throughout that period of three years. However, despite the decline in the company’s financial performance but it was not significant. Therefore the company needs to find out the cause of the issue. In 2015 to 2016 the company experienced financial progress while it drops in the following year.
- Financial ratio analysis
|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|
|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
|Accounts Receivable Turnover||3.42||5.34||10.12|
A financial ratio is calculated from the current financial status of the company. It is used to analyze company financial health, and it’s potential. The ratios are calculated to form the daily financial record of the company. The following are the financial ratio to be analyzed base on the MarketWatch company.
Liquidity ratios: the company can cover at its expense. It is categorized into a current ratio and quick ratio. The current and quick ratios of the company declined in 2016 then increase in 2017.
Operating ratios is the ratio that is used to measure the efficiency of the company operation. This ratio includes inventory turnover ratio, return on asset, receivable ratio, and sales ratio. In the company, it experiences an increase in the sale, receivable and returns on the asset over the three years. This shows that the company experience increase in revenue due to increase in sales.
Solvency ratios are the ratio that measures the stability of the company and the company ability to pay back its debts. It indicates financial health of the company. Solvency ratios include debt ratio, working capital and net sale on the working capital. The company experience decreases in the debt ratio, and there is an increase in working capital that show that the company can withstand its debts and for the last three years the company experience revenue increase. This show that there is progress in the Marketwatch company business over last three years.
According to financial record and financial performance record, Marketwatch Company is current stable in its business. The issue that may affect its operation is the big debt that it’s seen in its financial record. However, for the last three years, I have analyzed there is the decrease in the percentage debt and increase in working capital. This show that the company is stable to handle its operation smoothly and can pay for its debt.
- Return on equity
It is the amount of the net incomes returned as the percentage of the shareholders’ equity. It reveals the corporation profitability on the amount of the capital the company generates from the shareholders’ investment. Therefore, return on equity is equal to the division of the net income and shareholders’ equity. That is
ROE=net income/shareholder equity.
The other ways to determine ROE is 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, more so 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 is 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
ROE is one of the profitability ratios that measure the ability of the company to produce the profit from the investment from the shareholders. Therefore ROE shows the profit generate from the shareholder of the MarketWatch company investment. It also shows how effective the management of the company use the invested capital to fund the growth and operation of the MarketWatch company. In this case, the company generates the return on equity is O.45. This is low ROE to the investor. This show that the investors get very little from their investment. To improve this, the management of the MarketWatch company should identify ways to improve its operation that will lead to increase in sale, so that its revenue generation should increase. What one of the way management should do is to reduce operation cost by reducing expenditure cost. Also, the company should innovate the way that will expand its market and sales. The proper marketing of the company will do this on the market. Also, identify and analyze the weakness and strength of its competitors and build a strong foundation that will outdo them on the market. It will be done through developing good relationships with the customer and general public, products that company should deliver on the market should be of higher quality. This will shift the customers from its competitors to Marketwatch company’s products. Hence will increase its sale that increases revenue generation, thus return on the equity will be high to investors.
- The company expenditure for the last annual year report is $ 165.00 million. The expenditure of the company include the depreciation of the assets, daily expenditure, and the taxes to the government.
Beta value is used to measure the risk of the stock in case it is included in the well-diversified portfolio. It is am predictable for MarketWatch company beta value on the market. This so because its position on the market normally fluctuates. Another moment the beta value is 1%. At this time the company experience increase in sales and when it’s below one percent, the company experience decrease in sales.
- Stock analysis
Table for sales flow for three years in million
The product sale of the MarketWatch fluctuates on the market over time. For three years, the section of advert provides the company with the higher revenue as compared to other product. 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 show that some factors led to decrease in sales. Some of the factors that may lead to reducing in sales are stiff completion on the market from competitors, the decrease of the demand of 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 that will increase its revenue generation. Also, the company should innovate ways to increase its sales through employing modern operation method by improving technology system of operation. Improve its marketing strategy that will promote the product of the company on the market.
- Marketwatch Company is one of old company this field of social media and
communication. From the time of its embellishment, the company has grown steadily over time. For this duration, the company is aware of the market and the weakness it faces on the market. Therefore I recommend the company to recruit a more skillful individual that can change the operation of the company and improve its performance. Improving the production of the company. The company should evaluate the individual performance and also the performance of the department. The company should develop the strategy that should have mission, objective and goals to improve the performance of the companies that will 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 awareness of the company good on the market. This will be through the effective use of social media, creating a good public relation with the society and handling of the customer complaints with great care to improve it operation quality. Customer complaints should be used to improve the quality of the product the company offers to its customer.