Comparative Financial Statistics For Universal Office Fur

Table77comparative Financial Statistics Universal Office Furnishin

This financial statement analysis compares the financial performance and position of Universal Office Furnishings with its significant competitors, Cascade Industries, Colwyn Furniture, and High Design, Inc., based on data for the year-end 2016 and over a five-year period. The analysis evaluates various financial metrics, including assets, liabilities, profitability ratios, liquidity, and valuation multiples, to understand the company's strengths, weaknesses, and overall financial health relative to its industry peers.

Financial Position and Liquidity

Universal Office Furnishings reported total assets of $941.2 million, positioning it as a mid-sized industry player. Its total assets growth rate over five years was 14.4%, indicating steady expansion. Comparing to Cascade Industries, which had assets of $906.7 million with a higher growth rate of 19.4%, Universal's growth pace is slightly lower but still significant.

The company's long-term debt stood at $177.8 million, which, relative to its total assets, results in a debt-equity ratio of 0.60, suggesting a moderate leverage position. In stark contrast, Colwyn Furniture exhibited a higher debt-equity ratio of 1.46, indicating more aggressive debt financing. High Design, Inc., with a debt-equity ratio of 0.17, has a conservative leverage stance.

Stockholders' equity at $294.5 million signifies a solid equity base, representing 31.3% of assets. Although this is lower than Cascade's 55.3%, it indicates that Universal relies more on debt than some competitors, which could impact financial stability but also reflects a strategic use of leverage to finance growth.

Profitability Analysis

Universal Office Furnishings achieved total revenues of $1,938 million and net earnings of $139.7 million, translating to a net profit margin of 7.2%. The profitability is higher than Cascade Industries, which had a profit margin of 4.9%, signifying greater operational efficiency or pricing strategies.

Return on assets (ROA) for Universal is 14.8%, indicating efficient asset utilization generating substantial earnings relative to total assets. Its return on equity (ROE) is notably high at 47.4%, reflecting effective use of shareholders' funds for generating profits. In comparison, Cascade's ROE is 18.8%, considerably lower, implying less efficient use of equity capital.

High Design, Inc. demonstrates a moderate ROA of 6.7% and ROE of 13%, highlighting less profitability relative to its assets and equity. These ratios suggest that Universal's profitability margins outperform most competitors, potentially offering a competitive advantage.

Growth Trends

Universal has experienced robust growth over five years, with asset and revenue growth rates of 14.4% and 15.0%, respectively. Its earnings per share (EPS) grew at an impressive rate of 56.7%, indicating aggressive earnings growth. Similarly, dividends grew marginally by 1.5%, which may reflect reinvestment in the company or a conservative dividend policy.

Compared to its peers, Cascade's revenue growth was 17.8%, slightly higher but with a lower EPS growth of 38.9%, indicating different growth dynamics or profit margins. Colwyn Furniture's growth rates in revenues (15.9%) and earnings (21.1%) are comparable, but its lower profitability margins may temper overall growth sustainability.

Operational Efficiency and Valuation

The total asset turnover ratio for Universal is 2.06, higher than Cascade's 1.97 and Colwyn's 1.88, indicating superior efficiency in generating sales from assets. The company's P/E ratio is 18.4, slightly above Cascade's 14.4, reflecting a relatively higher market valuation, possibly due to higher growth expectations.

The PEG ratio, a metric that adjusts P/E for earnings growth, is 1.2 for Universal, suggesting that its valuation is aligned with industry growth prospects. Its price-to-book-value ratio of 8.7 also indicates that the stock is valued significantly higher than its book value, typical for growth-oriented firms.

In terms of dividend policy, Universal's payout ratio of 6.6% and dividend yield of 0.4% suggest conservative dividends relative to earnings, possibly favoring reinvestment for growth. Meanwhile, High Design, Inc. offers a higher dividend yield of 2.6%, aligning with a more income-focused approach, but with a lower valuation multiple.

Conclusion

Overall, Universal Office Furnishings demonstrates a strong financial position with high profitability ratios, efficient asset utilization, and substantial growth over five years. Its moderate leverage compared to peers affords it a balance between risk and return, while its high ROE and ROA suggest operational excellence. Valuation multiples support investor confidence, although the relatively low dividend payout indicates a focus on reinvestment rather than income distribution. When benchmarking against competitors, Universal’s performance suggests a healthy financial outlook and competitive advantage within the office furniture industry, though it must manage its leverage prudently to sustain growth and stability.

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