Financial Ratios Unit

Ratios

FinancialRatios

Unit

Talisman energyInc

One of Talisman’score competencies is its ability to have international operations andstill retain a strong corporate culture. The firm has operations inCanada, US, UK, Colombia, Australia, Norway, Algeria among othercountries around the world but operations in these countries haveonly enriched a rich corporate culture that guides the firm’soperations and is a key determinant of the firm’s performance andidentity. This competence is valuable to the firm as it binds itsemployees and subsidiaries from all over the world into onehomogenous entity that function with greater harmony. However, thiscompetence is not rare as it is possessed by several multinationalorganizations in different industries. For other organizations thatdo not possess strong corporate cultures, they can achieve that byinvesting in the right processes and training but there is noguarantee that such organizations can the right structures to supportthe development of a strong corporate culture.

Strong Tie ratios

Ratio Table

Performance Measure

2006

2007

2008

Industry Average

Liquidity

Current Ratio

5.0

4.28

3.14

4

Cash Ratio

0.08

0.35

0.08

0.5

Asset Management

Raw Materials Turnover in Days

10.6

8.7

31 days

WIP Turnover in Days

70

132

3 days

Finished Goods Turnover in Days

6.4

8.2

51 days

A/R Turnover in Days

5.2

5.2

63 days

A/P Turnover in Days

19

17

15

11 days

Cash Conversion Cycle

132

121

89

137 days

Fixed Assets Turnover

4.6

3.5

2.4

4.1

Total Asset Turnover

1.4

1.4

1.3

1.7

Long-term Debt Paying Ability

LT Debt to Total Capitalization

45.5%

45.9%

49.8%

35%

Cash Flow Coverage Ratio

0.72

0.47

0.1

2

Profitability

Gross Margin

35.5%

31.5%

27.6%

32%

Operating Profit Margin

14.2%

9.4%

2.5%

16%

Net Profit Margin

9%

5.5%

0.04%

10%

ROA

12.7%

7.7%

0.06%

17%

ROE

21.8%

13.6%

0.1%

28%

References

Thomson, D.(2012). Strong Tie. Richard Ivey School of Business. MGMT4001.