Question

I need help to write a detailed comparison of how each company is doing based on the ratios. Compare the company ratios to the industry and each other. It has to be written in the analysis column for each ratio.

Automotive	Autozone	O'Reily's	ANALYSIS
8	7	7.5
6	5.5	6
5	5	5
2	2	2.5
30%	30%	30%
1.5	2	1.75
2	1.46	1.54
1.48	1.65	2.03
1.55	1.45	1.35
2.89	3.98	4.65
5	6	7
6.89	4.56	8.98
7.89	9.87	10.23
1	2	3
2.56	4.56	1.23
2	5	6
1.3	2	2.68
2.24	1.23	1.68
3.65	1.3256	1.7895
8.65	7.23	4.35
7.8	4.23	4.38
5.6	4.23	4.69
8.96165	7.56	8.65
2.36	5.36	4.65
4.25	1.236	5.236
1.235	12.36	18.95

RATIOS
Profitability Ratios (%)
Gross Margin
EBITD Margin
Operating Margin
Pretax Margin
Effective Tax Rate
Financial Strength
Quick Ratio
Current Ratio
LT Debt to Equity
Total Debt to Equity
Interest Coverage
Valuation Ratios
P/E Ratio
Price to Sales (P/S)
Price to Book (P/B)
Price to Tangible Book
Price to Cash Flow
Price to Free Cash Flow
Management Effectiveness (%)
Return On Assets
Return On Investment
Return On Equity
Dividends
Dividend Yield
Payout Ratio
Efficiency
Revenue/Employee
Net Income/Employee
Receivable Turnover
Inventory Turnover
Asset Turnover

Answer 1

	Automotive	Autozone	O'Reily's	ANALYSIS
Gross Margin	8	7	7.5	Both Autozone and O'Reiley's are earning a lower gross margin when compared to the indutsry average of 8. O'Reiley's is earning a higher gross margin than Autozone
EBITD Margin	6	5.5	6	Autozone is earning a lower EBITD margin than the industry average as well as O'Reiley's figure. O'Reiley's margin is at par with the industry
Operating Margin	5	5	5	Opearting margin for both the companies are at par with the industry average
Pretax Margin	2	2	2.5	Pretax margin of O'Reiley's is higher than industry average as well as that of Autozone.
Effective Tax Rate	30%	30%	30%	Effective tax rate is same for both the companies and is at par with the industry average
Quick Ratio	1.5	2	1.75	Autozone has the highest level of liquidity as indicated by its quick ratio of 2. O'Reiley's quick ratio of 1.75 is better than the industry figure of 1.5 and this indicates higher liquidiy of the company than the industry average
Current Ratio	2	1.46	1.54	Both Autozone and O'Reiley's have a current ratio that is lower than the industry average and this indicates lower liquidity in terms of current ratio. O'Reiley's has a better current ratio than Autozone
LT Debt to Equity	1.48	1.65	2.03	Both Autozone and O'Reiley's have a higher degree of leverage than the industry average. O'Reiley's debt levels are higher than Autozone and hence it is making use of more levereage
Total Debt to Equity	1.55	1.45	1.35	Both Autozone and O'Reiley's have lower levels of total debt in their capital structure when compared to the industry average. This could be due to lower levels of short term debt. O'Reiley's has lower levels of debt than Autozone
Interest Coverage	2.89	3.98	4.65	Interest coverage ratio is highest for O'Reiley's and for Autozone the figure is higher than the industry average. This indicates higher capacity for both the companies to service their debts
P/E Ratio	5	6	7	P/E ratio of both the companies are higher than the industry average and this indicates that both the companies are enjoying a higher valuation than the industry. O'Reiley's has the higher P/E figure of 7 compared to Autozone
Price to Sales (P/S)	6.89	4.56	8.98	P/S ratio of O'Reiley's is higher and Autozone is lower than the industry average. This could be because of differences in base i.e. revenue for each company. Again the valuation of O'Reiley's is at a premium
Price to Book (P/B)	7.89	9.87	10.23	P/B ratio of both the companies are higher than the industry average and this indicates that both the companies are enjoying a higher valuation than the industry (in terms of book value of their assets). Also as was seen earlier O'Reiley's has the highest valuation
Price to Tangible Book	1	2	3	P/Tangible Book ratio of both the companies are higher than the industry average and this indicates that both the companies are enjoying a higher valuation than the industry (in terms of tangible book value of their assets). Also as was seen earlier O'Reiley's has the highest valuation
Price to Cash Flow	2.56	4.56	1.23	Autozone has a higher price to cash flow figure than the industry average while O'Reiley's has a lower figure. On a comparative basis O'Reiley's figure seems low
Price to Free Cash Flow	2	5	6	P/cash flow ratio of both the companies are higher than the industry average and this indicates that both the companies are enjoying a higher valuation than the industry (in terms of cash flow). Also as was seen earlier O'Reiley's has the highest valuation
Return On Assets	1.3	2	2.68	Both the companies enjoy a better utilization of their assets as their ROA figures are higher than the industry average. O'Reiley's is earning a better ROA than Autozone and this indicates that it is earning a higher level of income on its assets
Return On Investment	2.24	1.23	1.68	Both the companies have a ROI figure that is lower than the industry average and this indicates lower efficiency of utilization of its investments to earn profits. O'Reiley's has a higher ROI figure than Autozone
Return On Equity	3.65	1.3256	1.7895	Both the companies have a lower ROE figure than the industry average and this indicates that both the companies are earning a lower profits on their equity. O'Reiley's has a higher ROE figure than Autozone
Dividend Yield	8.65	7.23	4.35	In terms of dividend yield i.e. dividend as a percentage of current share price both the companies have a lower yield than the industry average. O'Reiley's has a very low dividend yield when compared to Autozone
Payout Ratio	7.8	4.23	4.38	Dividend payout for both the companies is lower than the industry average. O'Reiley's has a better payout ratio than Autozone
Revenue/Employee	5.6	4.23	4.69	Both the companies are generating a lower amount of revenue per employee. On a comparitive basis O'Reiley's is earning a higher amount of revenue per employee than Autozone
Net Income/Employee	8.96165	7.56	8.65	Both the companies are generating a lower amount of net income per employee. On a comparitive basis O'Reiley's is earning a higher amount of net income per employee than Autozone
Receivable Turnover	2.36	5.36	4.65	Receivables turnover of both the companies are higher than the industry average and this indicates that both the companies are better using receivables to generate sales. Autozone has a better ratio than O'Reiley's
Inventory Turnover	4.25	1.236	5.236	O'Reiley's has a higher inventory turnover ratio than industry benchmark and Autozone has a lowe figure. Inventory turnover indicates how effieicntly the inventory is being used to generate sales
Asset Turnover	1.235	12.36	18.95	Both the companies are generating higher sales from their assets when compared to the industry average. O'Reiley's has a higher turnover ratio than Autozone