Financial Ratios Unit

Financial Ratios

FinancialRatios

Unit

ManulifeFinancial

For ManulifeFinancial, the core competence is innovation. This provides the firmwith a sustained competitive advantage in the industry. Throughinnovation, the firm relies on its creative highly skilled staff andproper research and development to identify industry needs,cultivate, harness, nurture and execute best ideas and approaches inproviding financial services to other businesses around the world.This ability to innovate is very valuable to the firm as it improvesthe quality of the firm’s services and ensures that it applies thelatest and most accurate ideas to deliver its services. Thiscompetence is closely controlled by industry leaders who have thehuge resources required to power innovation such as investing onresearch and development. Use of innovation can be easily copied andimitated by competitors who have access to such key resources andalso compete in the same labor market. However, this does not meanthat competitors are equally adapted to accept and continually changeto accommodate new ideas as Manulife is.

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%

Dsi= (3255/10445)* 365= 113.7