Sample Essay

Return on Equity

The debt equity ratio for the company in 2002 was at 5.68, and the return on assets ratio at 0.2%. The return on equity ratio stood at 3.9% with the interest coverage in 2002 was 1.2. In 2004, the year of the merger, the debt equity ratio for the company was at 2.87, and the return on assets ratio at 0.4%. The return on equity ratio stood at 4.0% with the interest coverage in 2004 was 1.4. Two years after the merger, the debt equity ratio for the company in 2006 was at 3.12, and the return on assets ratio at NA%. The return on equity ratio stood at 11.8% with the interest coverage in 2006 was 1.5.

Operating Cash Flows & Absolute Cash Flows

The cash flow statement for 2002 depicted cash flows from operating activities to be $(25,134)m. The net cash flow for investing activities stood at $(23,334)m, with the net cash flow form financing activities recorded at $44,643m. The cash flow from operating activities in 2004 was at $(21,805)m, with the investing activities at $(23,076)m and the financial activities at $59,596m. Two years after the merger, in 2006, the cash flow from operating activities was at $(49,579)m, and the net cash flow from investing at $(99,627)m and $152,749m from financing activities. The total net cash flow for 2002, 2004 and 2006 were $(5,825)m, $14,715m & $3,742m respectively.

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