To begin with, these ratios have been such a process! They have been challenging, enlightening and difficult. From these ratios I have learnt that Keller UK are in trouble. However, they do have high efficiency which is just not reflected in their profitability ratios. The worst year for Keller across all sectors was 2018, due to losses which can be read about in the assignment. Keller overall is great to shareholders and gives more than they have in EPS to DPS.
In every scenario, Keller’s ratios were improved by separating the operating from the financial. I believe this portrays the reason why my company only has a small amount of financial activities and a high amount of operating activities.
The main questions I had raised was over the Price Earnings Ratio being so small. I wonder why it is so small and yes I do wonder whether it is correct or if I have calculated it incorrectly.
For this assignment I mainly compared with Louise’s company, Iberdrola. From here I learnt that Iberdrola had better profitability ratios due to better performance reflected through higher OI and net profit margin figures. Unlike Iberdrola however Keller has given more to shareholders in DPS than they received in EPS. This is great for shareholders however, not for the company which does need to save money. Unlike Iberdrola, Keller has a low RNOA which does portray that it does not effectively use it’s operating assets to generate profit, a main driver of the issues with profitability ratios.
However, I did learn through Facebook that many people with construction companies found that their days of inventory was high. Again that conversation can be seen in my assignment. This was so great as I got to compare with an industry benchmark and found overall Keller sat nicely on that benchmark where they did not lose opportunities through turning over their inventory to high, or lose to much in taking to long to turn over their inventory.
Through PASS, I was also able to compare Keller UK with both construction and just other companies. I learnt that although my profitability ratios were not to impressive, other companies also had low figures. This made me go ‘well Keller UK if they can do it so can we,’ which is weird I feel as if I have emotionally connected with Keller UK throughout this process. But I did learnt that other companies have had lower figures than Keller for net profit margin and return on assets for 3-4 years, as Keller has seen good figures in 2017-2016, but decreases from 2015 and 2018.
From this I feel as if Keller UK has a pattern where they buy/ upgrade assets and sectors (something I did notice in their 2018 and 2015 annual reports) every three years. This makes sense as their profitability ratios obviously decrease but their efficiency ratios increase. Also, this makes sense as Keller UK has quiet a high current ratio and hence more current assets than current liabilities. My company may seem as if they are going ‘off the rails’, however when you look at the big picture Keller UK push. They push their finances to improve their sectors and add value to their firm. they do this safely through having enough assets to cover any debts. Keller UK are quiet and interesting and well managed company.
Nonetheless, most of what I did learn is in my assignment.
Alisha Hart 