SUMMARY
1️⃣ Company vs. Its Own Trend Over Time
Plastichem Incorporated
● Liquidity:
○ Current ratio fell from 1.74 (1998) → ~1.2 (1999–2000) → 1.30 (2001).
○ Quick ratio stayed below 1 most years — very dependent on inventory for
obligations.
○ Trend: Worsening liquidity, especially 1998→2000.
● Leverage:
○ Debt ratio jumped from 57% (1998) → ~83–84% (1999–2000) → 105% (2001).
○ Equity turned negative in 2001, meaning liabilities exceeded assets.
○ Trend: Rapid deterioration into insolvency by 2001.
● Profitability:
○ Gross margin peaked in 2000 (~13%) but collapsed to 5.8% (2001).
○ Net margin swung from +5.6% (1998) to -24% (2001).
○ Trend: Sharp profit collapse in 2001.
● Efficiency:
○ Asset turnover dropped after 1999.
○ Inventory turnover declined, receivables collection slowed.
○ Trend: Weakening operational efficiency.
DCM Holding
● Liquidity:
○ Current ratio declined from 2.40 (1998) → 1.63 (2001), but still above 1.5.
○ Quick ratio stayed close to or above 1.
○ Trend: Gradual decline, but still healthy.
● Leverage:
○ Debt ratio rose slightly (42% → 54%), still moderate.
○ Debt-to-equity stayed in the 0.7–1.5 range.
○ Trend: Stable, no major solvency risk.
● Profitability:
○ Gross margin stable ~11–12%, net margin ~5–6%.
○ Returns on assets and equity consistently positive.
○ Trend: Steady performance, no major volatility.
● Efficiency:
○ Asset turnover high (1.4–1.5× in 2000–2001).
○ Inventory and receivable turnover remained stable.
○ Trend: Consistent efficiency.
2️⃣ Comparing Plastichem vs. DCM (2001 Snapshot)
Metric Plastichem DCM Who’s Stronger
(2001) (2001)
Current Ratio 1.30 1.63 DCM
Quick Ratio 0.79 0.91 DCM
Debt Ratio 105% 54% DCM
Gross Margin 5.8% 11.3% DCM
Net Margin -24% 5.9% DCM
ROA -26.9% 8.1% DCM
Interest Coverage 0.8× 4.7× DCM
Asset Turnover 0.97× 1.53× DCM
Inventory 42 days 54 days Plastichem slightly faster, but
Conversion overshadowed by weaknesses
Overall in 2001:
DCM is healthier in liquidity, solvency, profitability, and efficiency. Plastichem is in financial
distress with negative equity, poor margins, and weak debt servicing ability.
Financial statement analysis - Ratio (Values is in Millions)
Liquidity ratio
Current ratio
Plastichem Incorporated
Year 2001
80.8 M / 62.1 M = 1.30
Year 2000
96.1 / 63.1 = 1.52
Year 1999
87.3 / 59.7 = 1.46
Year 1998
34.7 / 26.5 = 1.30
DCM holding
Year 2001
32.8 / 20.1 = 1.63
Year 2000
30.2 / 19.9 = 1.52
Year 1999
24.1 / 13.2 = 1.83
Year 1998
15.5 / 7.4 = 2.09
Quick ratio
Plastichem Incorporated
Year 2001
53.4 M / 62.1 M = 0.86
Year 2000
72 / 63.1 = 0.25
Year 1999
62 / 59.7 = 1.03
Year 1998
21.9 / 26.5 = 0.826
DCM holding
Year 2001
17.3 / 20.1 = 0.86
Year 2000
18.5 / 19.9 = 0.93
Year 1999
14.7 / 13.2 = 1.11
Year 1998
11.6 / 7.4 = 1.57
Debt management
Debt ratio
Plastichem Incorporated
Year 2001
280.3 / 265.8 = 105%
Year 2000
287.3 / 343.9 = 84%
Year 1999
282 / 340 = 83%
Year 1998
57.2 / 99.4 = 57%
DCM holding
Year 2001
49 / 90.1 = 54%
Year 2000
52.3 / 87.7 = 60%
Year 1999
35.8 / 64 = 56%
Year 1998
15 / 36 = 42%
Debt to equity ratio
Plastiche Incorporated
Year 2001
280.3 / -14.5 = -19.3%
Year 2000
287.3 / 56.6 = 5.1%
Year 1999
282 / 58 = 4.9%
Year 1998
57.2 / 42.2 = 1.4%
DCM holding
Year 2001
49 / 41.1 = 1.2%
Year 2000
52.3 / 35.4 = 1.5%
Year 1999
35.8 / 28.1 = 1.3%
Year 1998
15 / 21 = 0.7%
Time interest earned
Plastichem incorporated
Year 2001
17.1 / 22.4 = 0.8 x
Year 2000
38.8 / 20.3 = 1.911x
Year 1999
30.6 / 15.6 = 1.962x
Year 1998
12.7 / 5.2 = 2.442x
DCM holding
Year 2001
14.0 / 3.0 = 4.7x
Year 2000
12.9 / 2.3 = 5.609x
Year 1999
9.7 / 1.8 = 5.389x
Year 1998
4.3 / 0.5 = 8.6 x
Profitability
Gross profit margin
Plastichem incorporated
Year 2001
17.1 / 297 = 0.058
Year 2000
38.8 / 294 = 0.132
Year 1999
30.6 / 252.4 = 0.121
Year 1998
12.7 / 129.3 = 0.098
DCM holding
Year 2001
14 / 123.6 = 0.113
Year 2000
12.9 / 106.7 = 0.121
Year 1999
9.7 / 85.7 = 0.113
Year 1998
4.3 / 43.2 = 0.1
Net profit ratio
Plastichem incorporated
Year 2001
-71.5 / 297 = -0.24
Year 2000
2.0 / 294 = 0.007
Year 1999
3.7 / 252.4 = 0.015
Year 1998
7.3 / 129.3 = 0.056
DMC holding
Year 2001
7.3 / 123.6 = 0.059
Year 2000
6.6 / 106.7 = 0.062
Year 1999
4.9 / 85.7 = 0.057
Year 1998
2.3/ 43.2 = 0.053
Return on total asset
Plastichem incorporated
Year 2001
-71.5 / 265.8 = -0.269
Year 2000
2.0 / 343.9 = 0.006
Year 1999
3.7 / 340 = 0.011
Year 1998
7.3 / 99.4 = 0.073
DCM holding
Year 2001
7.3 / 90.1 =0.081
Year 2000
6.6 / 87.7 = 0.075
Year 1999
4.9 / 64 = 0.077
Year 1998
2.3 / 35 = 0.066
Return on total equity
Plastichem incorporated
Year 2001
-71.5 / -14.5 = 4.931
Year 2000
2.0 / 56.5 = 0.035
Year 1999
3.7 / 58 = 0.064
Year 1998
7.3 / 42.2 = 0.173
DCM holding
Year 2001
7.3 / 41.1 = 0.17
Year 2000
6.6 / 35.4 = 0.18
Year 1999
4.9 / 28.1 = 0.174
Year 1998
2.3 / 21 = 0.11%
Basic earning power
Plastichem incorporated
Year 2001
17.1 / 265.8 = 0.064
Year 2000
38.8 / 343.9 = 0.113
Year 1999
30.6 / 340 = 0.09
Year 1998
12.7 / 99.4 = 0.128
DCM holding
Year 2001
14 / 90.1 =0.155
Year 2000
12.9 / 87.7 = 0.147
Year 1999
9.7 / 64 = 0.152
Year 1998
4.3 / 35 = 0.123
Asset management (Values is not in millions)
Total asset turnover
Plastichem incorporated
Year 2001
297,000,000 / 304,850,000 = 0.97x
Year 2000
294,000,000 / 341,950,000 = 0.86x
Year 1999
252,400,000 / 219,700,000 = 1.15x
DCM holdings
Year 2001
123,600,000 / 80,900,000 = 1.53x
Year 2000
106,700,000 / 75,850,000 = 1.41x
Year 1999
252,400,000 / 100,000,000 = 2.52x
Inventory turnover ratio
Plastichem incorporated
Year 2001
222,200,000 / 25,750,000 = 8.63x
Year 2000
294,000,000 / 24,700,000 = 11.90x
Year 1999
252,400,000 / 19,050,000 = 13.25x
DCM holdings
Year 2001
82,600,000 / 12,300,000 = 6.72x
Year 2000
69,200,000 / 10,550,000 = 6.56x
Year 1999
55,500,000 / 6,650,000 = 8.35x
Inventory conversion period
Plastichem incorporated
Year 2001
365 / 8.63 = 42 days
Year 2000
365 / 11.90 =31 days
Year 1999
365 / 13.25 = 28 days
DCM holdings
Year 2001
365 / 6.72 = 54 days
Year 2000
365 / 6.56 = 56 days
Year 1999
365 / 8.35 = 44 days
Accounts receivable turnover ratio
Plastichem incorporated
Year 2001
297,000,000 / 52,850,000 = 5. 61x
Year 2000
294,000,000 / 54,850,000 = 5.36x
Year 1999
252,400,000 / 35,500,000 = 7.12x
DCM holding
Year 2001
123,600,000 / 17,000,000 = 7.27x
Year 2000
106,700,000 / 14,550,000 = 7.3x
Year 1999
85,700,000 / 10,000,000 = 8.57x
Daily outstanding receivable
Plastichem incorporated
Year 2001
365 / 5. 61= 61 days
Year 2000
365 / 5.36 = 68 days
Year 1999
365 / 7.12 = 51 days
DCM holding
Year 2001
365 / 7.27 = 50 days
Year 2000
365 / 7.3 = 50 days
Year 1999
365 / 8.57 = 43 days