ADAMS GOLF INC

Adams Golf Inc

Adams Golf Inc

Comparative Financial Analysis

Adams Golf

Aldila

Johnson Outdoors

Profitability Ratios

ROA % (Net)

8.43

6.02

3

ROE % (Net)

11.52

8.35

5.41

ROI % (Operating)

12.02

5.33

9.81

Operating Profit Margin %

6.69

5.94

6.03

Revenue per Employee

668,581

44,661

305,564

Liquidity Ratios

Quick Ratio

1.03

0.26

1.08

Current Ratio

3.32

2.96

2.39

Net Current Assets % TA

57.35

38.9

41.06

Debt Management

Total Debt to Equity

0.71

0.03

0.19

Interest Coverage

164.53

59.96

2.91

Asset Management

Total Asset Turnover

1.44

1.45

1.75

Receivables Turnover

5.76

7.99

8.49

Inventory Turnover

2.07

4.21

3.44

Accounts Payable Turnover

14.7

13.71

18.02

Profitability Ratio

This ratio measures the overall profit performance of Nokia and Sony Ericsson. It should be noted that these companies exist principally to generate profit and pay adequate return to the investors or owners. This is because when the potential investors wants to buy share in the company the first question they are likely to ask '' is the company making profit''. If the answer is ''yes'' they will again ask whether company is making adequate profit or not in terms of capital invested. So this ratio provide a clue as to how successful the managers of Adams Golf Inc. have been towards generating profitability (Walton, 2000). It also shows how well the costs of production including expenses have been controlled and minimized. The Return on Assets measures the effectiveness of the company in generating of earnings from their assets before contractual payment is made. Adams Golf recorded return on total assets of 8.43 %. The Return on Equity measures the return being generated on supplies of capital on annual basis. Adams Golf's return on equity is 11.52 % while other companies have 8.35 % and 5.41 %. The revenue per employee is very high which shows the efficient productivity of the company. By observing the above charts, we can clearly see that Adams Golf Inc. is making high returns as compared to the competitors. After reviewing the financial statements of previous years, the company has improved its return in the last couple of years and is struggling to be more efficient in future.

Liquidity Ratio

These are the ratio used to measure the ability of these companies (Nokia and Sony Ericsson) to meet its short term indebtedness (i.e., current liabilities) as to when they fall due. These companies are to ensure that they are not too liquid (Thomas, 2006). This is because; if they are too liquid their profit will reduce due to the loss of the capital, which is tied in the liquid asset. On the other hand these companies should ensure that they are liquid (i.e. they do not lack liquidity). This is because if they are not liquid and therefore unable to pay its creditors, they might go out of existence.

The current ratio of Adams Golf is in very good position and is very high as compared to the two competitors. The ideal current ratio for a successful company is 2:1 and Adams Golf has 3.32:1, which means company can pay off its current liabilities through its current assets.The quick ratio of the company is also very good and is above than the standard 1:1. Johnson outdoors is little higher than the Adams Golf in the quick ratio, however, the difference is very small.Debt Management Ratios

The interest coverage ratio indicates the number of times ...