Question

Refer to the data set (four years of ratios and graphs) in the Saputo vs Maple Leaf Foods to perform trend, cross-sectional, and integrative analysis.

For the Liquidity ratio category, you should describe the overall trend of each company during the 4-year period, for example, improved, worsened, relatively stable, etc. In addition, you should present a summarized cross-sectional comparison between the two companies. An example in the profitability ratio category would be “Company A is overall more profitable than Company B.” You must support your summary of cross-sectional comparisons with at least one individual ratio in each category.

Liquidity Ratios:

Return on equity 20.00% 15.00% Gross profit percentage 35.00% 30.004 25.000 20.004 15.00 10.000 5.00% Saputo Maple Saputa Maple 10.00% 5.00% 0.0006 0.004 2015 2016 2017 2018 2015 2016 2017 2018 Inventory turnover ratio Net profit margin percentage 12.00 10.00 Saputo +-Saputo --Maple 6.00 8.00% 6.00% 4.00% 2.00% 0.00% 4.00 2.00 ---Maple 0.00 2015 2016 2017 2018 2015 2016 2017 2018 Accounts receivable turnover ratio Return on total assets 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 160.00 140.00 120.00 100.00 80.00 Saputo Maple Saputo Maple 60.00 40.00 20.00 0.00 0.00% 2015 2016 2017 2018 2015 2016 2017 2018 Inventory turnover ratio 12.00 10.00 Sapute Maple 0.00 2015 2016 2017 2018 Asset turnover ratio 150 Saputo 1.00 --Maple 0.50 0.00 2015 2016 2017 2018 Accounts payable turnover ratio 12.00 10.00 8.00 Saputo 6.00 Maple 400 2.00 0.00 2015 2016 2017 2018

Answer clearly, I will give you a thumb!

Answer 1

Details of the ratios is as follows:

Name of the ratio	Saputo (Represented by Blue Line)	Maple (Represented by Red LIne)	Cross-sectional comparison
Gross Profit Ratio	Its ratio has gone up from the year 2015 to 2017 while it is stable in the year 2018.	Its ratio has gone up from the year 2015 to 2016 and then went to decline steeply from 2016 to 2018.	Based on gross profit ratio performance of Saputo is better than Maple.
Net Profit Margin	Its ratio has gone down steeply from the year 2015 to 2016, then from 2016 went on to increase steadily	Its ratio has sharply increased from 2015 to 2016, from 2016 to 2018 the ratio has come down steadily	Based on Net profit margin Saputo has higher net profit margin and therefore it is a better company.
Return on total asset	From 2015 to 2016, the ratio has slightly come down. From 2016 to 2018 ratio has increased steadily.	From 2015 to 2016, there is a sharp increase in ratio, from 2016 to 2018 there is a steady decline in the ratio.	Based on Return on total assets Saputo's return is higher as compared to Maple Hence, Saputo is a better company.
Return on Equity	From 2015 to 2016, the ratio has slightly come down and from 2016 to 2018 went on to increase steadily	There is a sharp increase in the ratio from 2015 to 2016, from 2016 to 2018 ratio has come down steadily.	Based on return on equity criterion, Saputo has consistently given a higher return on equity. Therefore, Saputo is a better company.
Turnover Ratios
Inventory Turnover Ratio	From 2015 to 2016, ratio has slightly come down, from 2016 to 2017 ratio has slightly increased, from 2017 to 2018 there is a sharp decline in ratio.	From 2015 to 2017 ratio has decreased steeply, from 2017 to 2018 ratio has decreased slightly.	It is always better to have higher inventory turnover ratio. Higher ratio suggest quick movement of inventory. Therefero, Maple is better from this angle.
Accounts receivable turnover ratio	Ratio has sharply come down from 2015 to 2016, then steeply declined from 2016 to 2017, from 2017 to 2018 there is a slight decline in the ratio.	There is no or very slight change in the ratio of the company from 2015 to 2018	It is always better to have higher Accounts receivable turnover ratio. It suggests that, there is a quick recovery of debtors and not much fund is blocked in debtors. Therefore, Maple is a better company.
Asset Turnover ratio	The ratio has slightly declined from 2015 to 2017, and from 2017 to 2018 there is almost no decline in the ratio.	From 2015 to 2017 ratio has gone up to increase steadily, from 2017 to 2018 decreased steadily	It is always better to have higher asset turnover ratio, hence, saputo is a better company.
Accounts Payable turnover ratio	Ratio is consistent from 2015 to 2016 and from 2016 to 2018 has slightly declined	Ratio is consistent from 2015 to 2017 and steeply declined from 2017 to 2018.	It is better to have less Accounts payable turnover ratio, if the trade payables allow interest free credit period. Based on that Saputo is a better company.
Financial Ratios
Current Ratio	From 2015 to 2016 ratio has declined to a very lower extent, fro 2016 to 2017 there is a sharp increase and from 2017 to 2018 again a very low decline	From 2015 to 2016, there is a slight increase in the ratio, from 2016 to 2018 there is a sharp decline in the ratio.	Based on current ratio, maple had higher current ratio till 2017 and in the year 2018 saputo has higher current ratio. Therefore, maple was better till 2017 and saputo has become better in 2018.
Quick Ratio	From 2015 to 2016 it is stable, 2016 to 2017 it has increased sharply, from 2017 to 2018 no major variation is seen.	From 2015 to 2016, there is a slighter increase, from 2016 to 2018 there is a sharp decline.	Based on quick ratio, higher the ratio better the company, upto 2017 maple was a better company. From 2018 Saputo's quick ratio has surpassed maple's ratio so it has become better.
Debt to total asset ratio	From 2015 to 2016 there is a slight decrease, from 2016 to 2017 there is no change, from 2017 to 2018 again slight decrease is there.	From 2015 to 2017 there is no change in the ratio, from 2017 to 2018 there is a sharp increase in the ratio	Lower the ratio better the company. Therefore, Maple is a better company based on debt to total asset ratio.
Times interest earned.	From 2015 to 2016 stable ratio, from 2016 to 2017 sharp increase is there and from 2017 to 2018 there is a slight decrease in ratio.	There is sharp increase from 2015 to 2016, a very low increase from 2016 to 2017, sharp decline from 2017 to 2018.	Higher the ratio, better is ability to service debt and better is the company. From 2015 to 2017 Maple is a better company, from 2018 Saputo has become a better company.
Price Earning Ratio	Slighter increase from 2015 to 2016 and slight decrease from 2016 to 2018.	Sharp decrease from 2015 to 2016, steady increase from 2016 to 2018.	Based on P/E ratio - Maple was a better company from 2015 to 2017 and Saturo has become a better one in the year 2018.
Dividend Yield Ratio	Slight decrease from 2015 to 2016, no change from 2016 to 2017 and sharp incrase from 2017 to 2018.	Steep decrease from year 2015 to 2017 and a sharp increase from 2017 to 2018	Based on dividend yield saputo was a better company upto year 2017 and maple has become a better company in the year 2018.