Question

Select a firm that competes in an industry in which you are interested. Drawing upon published financial reports, complete a financial ratio analysis. Based on changes over time and a comparison with industry norms, evaluate the firm’s strengths and weaknesses in terms of its financial position. I would like to have a financial ratio analysis of Alibaba.

Answer 1

Alibaba is Chinese multinational technology company with a specialisation in e-commerce and retail as well as internet and technology and it is a direct competitor to Amazon. This company has its strong foothold in China and it is the largest E-Commerce retailer of China so it is catering to the Chinese Market in the best possible manner and it is also gaining more and more market share and it is restricting the entry of giants like Amazon and other big E-Commerce player in Chinese Market due to its competitive advantage in China.

When we will be considering the financial analysis of Alibaba the overall net debt of the company has almost increased to 20 billion dollars and it is almost 20% of the overall capital which is a very high standard maintenance in respect to debt to equity ratio so there is no solvency risk with this company as there is Earning per share growth of per quarter visible of almost 100% and sales has been also growing for a constant 34%, so the profitability ratio as well as the turnover ratio of the company has been consistently going up and it will mean that the company is trying to acquire market share by growing sales as well as growing profits.

When we will be looking at the quick ratio on the current ratio of the company the company have a very high current ratio and it is having a high liquidity in his hands and the long-term debt to equity ratio and the total debt to equity ratio has been consistently Low and company having a better control over its performance as there is low solvency ratio it can be said that the company is having better solvency and liquidity

weakness regarding this company is that there is a high competition in the market it is performing and it is not able to grow it's foothold outside the China because there is a strong market player like Amazon and Reliance which is trying to acquire market share so it does not have much competitive advantage beyond China so it is trying to grow on going global.