Digby Performance Compared to Rivals Essay.

Posted: November 14th, 2022

Digby Performance Compared to Rivals Essay.

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There are important ratios to different things like sales, equity and assets. The main focus of every business is to generate the highest profits from each category of business. The graphs below illustrates Digby efficiency and returns based on three aspects, sales, assets and equity. Digby Performance Compared to Rivals Essay.

D5. Discussion Of Ethical Vignettes: Approaching Competence

Approaching Competence: The discussion is not logical or does not include sufficient detail of how each of the 3 ethical vignettes presented impacted the company’s financial performance. Digby Performance Compared to Rivals Essay.

EVALUATOR COMMENTS: ATTEMPT 3

A general summary is included regarding the ethics modules. It is not clear how the ethical scenarios presented impacted the company’s performance in terms of the percentage of increased expenses or a comparison of costs from previous years to the current costs.

Digby Performance Compared to Rivals
Digby is competing in an industry that have five other highly competitive firms. The main objective for the firm is to outdo the rest and post significant returns on an annual basis (Chapman, Murray, & Mellor, 2017). However, this is not something easy for firms that are selling different items, and employing different strategies in the same market. This analysis examines the performance of Digby on different aspects, and compares that to the performance of Ferris, rival in the sector.
Performance Comparison. Digby Performance Compared to Rivals Essay.
There are important ratios to different things like sales, equity and assets. The main focus of every business is to generate the highest profits from each category of business. The graphs below illustrates Digby efficiency and returns based on three aspects, sales, assets and equity.
Analysis Graphs
Return on Sales (ROS)
Graph 1

ROS is a measure of how efficiently a firm turns sales into profits (Jinadu, Oluwafemi, Soyinka, & Akanfe, 2017). Highly efficient firms have a high level of ROS. That means the company is able to convert a higher ratio of sales into profits. Graph 1 shows that Digby outperformed all other firms in the industry, managing 8.7 percent ROS compared to the closes rival Andrews, which had 7.0 percent. The rest of the firms had less ROS, an indication that they were not as efficient as Digby. However, the major rival was outperformed and managed to post 5 percent return on sales. The following graph shows the differences in each round.

Digby was better in the next round, with 8.9 percent returns compared to 5.3 percent posted by its closest rival, Ferris. Both continued to improve as Digby managed a 9.2 percent returns compared to Ferris which had 6.1 percent. Efficacy in this category implies that the firm maximized sales over a small percentage of expenses. Firms that had less ROS had more expenses per unit of sales, and that made them less efficient.

Return on Equity (ROE)
Graph 2

Investors put their money into companies with expectations of earning some profits. These money they invest is called equity, and is entitled to some equity. Investors would want to earn as much as possible for every unit of equity and that means firms that post higher ROE are better placed to attract investors than those who post less ROE (Jinadu, Oluwafemi, Soyinka, & Akanfe, 2017).. Therefore, ROE is just the profits investors get from their investments in the company. Digby was exceptional in creating value for investors, posting 19.3 percent ROE. In other words, that would mean investors at Digby made 0.193 cents from every dollar of investment. The second best company was Chester, which posted 13.7 percent ROE, followed by Baldwin, Ferries, Erie, and the worst performer was Ferries at Andrews at 11.7 percent. Once more, Digby outperformed rivals. Digby Performance Compared to Rivals Essay.

The Next two rounds Digby performed better compared to Ferris. Digby had a 19.8 and 21.23 percent in round 7 and round 8 respectively, with Ferris managing 11.8 and 13.5 percent respectively. The firm was superior in terms of giving investors returns, compared to the key rivals in this case.
Return on Assets (ROA)
Graph 3

Return on Assets (ROA) is the firm’s profits compared to its overall resources (Jinadu, Oluwafemi, Soyinka, & Akanfe, 2017). Firms aim to gain optimally from there resources. Digby once more was exceptional in this category, turning a 10.4 percent ROA. Chester, the second best was three percentage points below, return on 7.0 percent ROA. Erie, Ferris and Andrews each had 6.0 percent ROA, and Baldwin performed slightly better. In terms of using sales, assets and equity to generate value, Digby outperformed its rivals for the three years, on a continual basis.
Explanation of Leverage
One key determinant of ROE and ROA is the capital structure. Capital structure, which defines leverage, looks at the ratio between assets and liabilities, or debts (Jain, Bhargava, & Bhargava, 2017). It is possible to have firms that are funded 100 percent by equity, and this firms will have all profits going to investors. However, due to cost implications, firms decide to raise part of capital through the debt market. The most important leverage point measures debts t equity ratio. Digby Performance Compared to Rivals Essay.
The equity remains the same when assets are increased through debts, but since the firm will have more assets (equity plus liabilities), it is likely to increase profits. This means the ROE will possibly increase as well. The same happens with assets, when firms increase assets through equity or liabilities, it can affect the ROA in either way. In the long term the ROA may be low, but will increase over the long term. Leveraging essential means using loans to increase overall value. Based on that, ROE can be increased through leveraging, but ROA remains uncertain.
Company Performance
Stock Price Summary Graph
Graph 4

The share price is the key determinant of the firm’s market capitalization. Investors expect stock price growth since that represent part of their capital gains. Digby had the highest share price compared to rivals. It thus follows that the company would have the highest market value. Digby market value stood at $447 million compared to Digby that had a market value of $325 million. The stock price experience stead increase for three years, hitting the climax in round eight. Despite the huge market capitalization, the yield was dismal, Digby having a 2.5 percent compared to Ferris, the industry leader in that category that had 10.5 percent. It ranked as the worst performer in that category for three years. Digby Performance Compared to Rivals Essay.
Digby had the best earnings per share. The firm posted $30.87 with Chester coming close second, with almost half the same amount. That illustrates how effective Digby was in return value to shareholders. Ferris was the worst performer for the three year period, returning $7.56 for every share. In terms of dividends, Digby gave out $6.00 in the last round, an improvement from previous rounds. However, it was not the firm that gave out the most dividends.
Financial Standing Analysis
Balance Sheet
An important aspect in the balance sheet is checking whether available assets can cover liabilities. More importantly, it is determining if the current assets can cover the current liabilities. This concept is called current ratio, which measures the firm’s ability to use current assets to honour short term financial obligations. The firm’s current ratio in round seven was 2.44, increasing to 2.56 in the last round. That means the firm had more current assets than short term financial obligations, placing it at a better position to settle them.
In terms of assets, the company’s total assets stood at $259.7 million, an increase from the previous round. Those assets comprised both liabilities and equity. The company’s total equity share was $151.2 million, and liabilities were $108.5 million, both had increased from previous year. This means the firm has more equity than liabilities, and that gives it an advantage in sustainability and keeping off external intervention. The owners were in control of the company, if the capital structure is anything to consider. Digby Performance Compared to Rivals Essay.
Income Statement
Digby posted sales worth $356 million followed by Chester that had $284 million, the rest posted less. More sales means the company is doing better, and most firms does everything to increase sales. However, as the firms increase sales, variable costs increase while average fixed costs decline. This is measured by contribution margin. It is usually the costs per increase in unit of sales. That means firms with higher contribution margins are more efficient. Digby had a 44.3 percent contribution margin, but Ferris and Baldwin had less than 40 percent, with Andrews having over 50 percent, the most efficient. Digby was the best performer with $56 million in net income, followed by Chester with $38 million. Digby Performance Compared to Rivals Essay.
Cash Position Analysis
Firms receive cash flow from three main sources, investing activities, financing activities and operating activities. Operating activities is the common and the highest contributor to cash flow. The firm’s net cash flow from operations was $50 million, and increase from a year earlier when it had posted 46 million from operations. This means the management did well in sales, working on various departments including production and marketing to increase sales.
The firm had negative cash flow from investing activities. That means it spent more resources than it received from investments. This can include purchase of equipment, construction and other activities that consume resources. However, the value was -$12 million compared the previous years when the value was -$70 million. The firm also retired resources and achieved a negative value from financing in last round, compared to a year earlier when it had managed to accrue $13 million from financing activities. At the closure, the firm’s net cash flow was $50 million, an increase from a year earlier when it had $42 in net cash flow.
Discussion of Ethical Vignettes
There are several ethical considerations as the firm pushes to increase profitability, which is the main goal of the company. One is increase technology that risks employee jobs to increase productivity. Investments in plants and other technologies will mean the company will need fewer employees. Usually, employees would lose their jobs. However, this action has a positive effect on the firm’s profitability. It is an ethical issues, and the company can consider expanding to retain them. There are other concerns like employee training which the firm must pay, investing in green technologies and others.
Greening the Message
The company will work on greening message particularly to introduce energy efficiency and many other green technologies. This will likely increase demand as the products will meet the customer expectations. It will also exhibit the company as sensitive to environmental conservation. This is something which is essential and has multiple benefits for the whole organization. This action will significantly lower administration costs, increase awareness level and increase demand. All these will have an effect on the firm’s bottom line.
To Speak or Not to Speak
There is a long time value for being ethical particularly when dealing with things that matter most. If the company is failing to do the right thing, speaking up can save it over the long term. Damaging water community may benefit the company in the short term, but over the long term it cannot. It is thus essential to make the call to the environmental authorities. While the damage can happen at the start due to poor publicity, over the long term the changes that will happen, including purchase of new equipment to address the concern will benefit the company. Digby Performance Compared to Rivals Essay.
Face up to It
Challenges occur in almost all organizations and facing them is one of the things which anyone should look up to. In this case there is some errant sales reps who should be terminated, and a contract renegotiated. The contract will be almost the same, but there shall be display of quality leadership. With the staff more excited over the whole issue, they will handle customers in a better way. This will likely drive demand high.
Conclusion
Digby outperformed rivals in almost every financial metric and more particularly its major rival Ferris. The company managed significant sales, and improved efficiency which was the core reason why it managed significant returns from sales and assets. However, the industry remains highly competitive for three rounds, and that would be detected from stagnating sales over the same period.
Digby Performance Compared to Rivals

Digby is competing in an industry that have five other highly competitive firms. The main objective for the firm is to outdo the rest and post significant returns on an annual basis (Chapman, Murray, & Mellor, 2017). However, this is not something easy for firms that are selling different items, and employing different strategies in the same market. This analysis examines the performance of Digby on different aspects, and compares that to the performance of Ferris, rival in the sector.

Performance Comparison

Analysis Graphs

Return on Sales (ROS)

Graph 1

Return on Equity (ROE)

Graph 2

Return on Assets (ROA)

Graph 3

Explanation of Leverage

One key determinant of ROE and ROA is the capital structure. Capital structure, which defines leverage, looks at the ratio between assets and liabilities, or debts (Jain, Bhargava, & Bhargava, 2017). It is possible to have firms that are funded 100 percent by equity, and this firms will have all profits going to investors. However, due to cost implications, firms decide to raise part of capital through the debt market. The most important leverage point measures debts t equity ratio.

The equity remains the same when assets are increased through debts, but since the firm will have more assets (equity plus liabilities), it is likely to increase profits. This means the ROE will possibly increase as well. The same happens with assets, when firms increase assets through equity or liabilities, it can affect the ROA in either way. In the long term the ROA may be low, but will increase over the long term. Leveraging essential means using loans to increase overall value. Based on that, ROE can be increased through leveraging, but ROA remains uncertain. Digby Performance Compared to Rivals Essay.

Company Performance

Stock Price Summary Graph

Graph 4

Digby had the best earnings per share. The firm posted $30.87 with Chester coming close second, with almost half the same amount. That illustrates how effective Digby was in return value to shareholders. Ferris was the worst performer for the three year period, returning $7.56 for every share. In terms of dividends, Digby gave out $6.00 in the last round, an improvement from previous rounds. However, it was not the firm that gave out the most dividends. Digby Performance Compared to Rivals Essay.

Financial Standing Analysis

Balance Sheet

An important aspect in the balance sheet is checking whether available assets can cover liabilities. More importantly, it is determining if the current assets can cover the current liabilities. This concept is called current ratio, which measures the firm’s ability to use current assets to honour short term financial obligations. The firm’s current ratio in round seven was 2.44, increasing to 2.56 in the last round. That means the firm had more current assets than short term financial obligations, placing it at a better position to settle them. Digby Performance Compared to Rivals Essay.

In terms of assets, the company’s total assets stood at $259.7 million, an increase from the previous round. Those assets comprised both liabilities and equity. The company’s total equity share was $151.2 million, and liabilities were $108.5 million, both had increased from previous year. This means the firm has more equity than liabilities, and that gives it an advantage in sustainability and keeping off external intervention. The owners were in control of the company, if the capital structure is anything to consider. Digby Performance Compared to Rivals Essay.

Income Statement

Digby posted sales worth $356 million followed by Chester that had $284 million, the rest posted less. More sales means the company is doing better, and most firms does everything to increase sales. However, as the firms increase sales, variable costs increase while average fixed costs decline. This is measured by contribution margin. It is usually the costs per increase in unit of sales. That means firms with higher contribution margins are more efficient. Digby had a 44.3 percent contribution margin, but Ferris and Baldwin had less than 40 percent, with Andrews having over 50 percent, the most efficient. Digby was the best performer with $56 million in net income, followed by Chester with $38 million.

Cash Position Analysis

Firms receive cash flow from three main sources, investing activities, financing activities and operating activities. Operating activities is the common and the highest contributor to cash flow. The firm’s net cash flow from operations was $50 million, and increase from a year earlier when it had posted 46 million from operations. This means the management did well in sales, working on various departments including production and marketing to increase sales.

The firm had negative cash flow from investing activities. That means it spent more resources than it received from investments. This can include purchase of equipment, construction and other activities that consume resources. However, the value was -$12 million compared the previous years when the value was -$70 million. The firm also retired resources and achieved a negative value from financing in last round, compared to a year earlier when it had managed to accrue $13 million from financing activities. At the closure, the firm’s net cash flow was $50 million, an increase from a year earlier when it had $42 in net cash flow. Digby Performance Compared to Rivals Essay.

Discussion of Ethical Vignettes

There are several ethical considerations as the firm pushes to increase profitability, which is the main goal of the company. One is increase technology that risks employee jobs to increase productivity. Investments in plants and other technologies will mean the company will need fewer employees. Usually, employees would lose their jobs. However, this action has a positive effect on the firm’s profitability. It is an ethical issues, and the company can consider expanding to retain them. There are other concerns like employee training which the firm must pay, investing in green technologies and others. Digby Performance Compared to Rivals Essay.

The company will work on greening message particularly to introduce energy efficiency and many other green technologies. This will likely increase demand as the products will meet the customer expectations. It will also exhibit the company as sensitive to environmental conservation. There is a long time value for being ethical. If the company is failing to do the right thing, speaking up can save it over the long term. Damaging water community may benefit the company in the short term, but over the long term it cannot. It is thus essential to make the call to the environmental authorities. While the damage can happen at the start due to poor publicity, over the long term the changes that will happen, including purchase of new equipment to address the concern will benefit the company.

Challenges occur in almost all organizations and facing them is one of the things which anyone should look up to. In this case there is some errant sales reps who should be terminated, and a contract renegotiated. The contract will be almost the same, but there shall be display of quality leadership. With the staff more excited over the whole issue, they will handle customers in a better way. This will likely drive demand high.

Conclusion

Digby outperformed rivals in almost every financial metric and more particularly its major rival Ferris. The company managed significant sales, and improved efficiency which was the core reason why it managed significant returns from sales and assets. However, the industry remains highly competitive for three rounds, and that would be detected from stagnating sales over the same period. Digby Performance Compared to Rivals Essay.

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