Evaluation of Safeway Co.
Safeway Co. Evaluation
Safeway has always been one of the most popular supermarket chains in the United States. They have been on the Fortune 500 top 100 list many years running. The store has many competitors, but none as great as Wal-Mart. Wal-Mart is able to offer below market prices to its customers that Safeway cannot do without it eating into their profits, but Safeway has been very fortunate with its customer loyalty and offering quality products that the other chains are not offering. The company’s revenues have been increasing 43.6 billion up from 41 billion and their expenses were more than the previous year’s which gave them a net income of 518 million down from 2010 which was 590 million. The Profit Margin ratio and the Gross Profit to Sales ratio gives a good insight on the company’s ability to generate earnings. The graph here shows where the company is and that is does not have a problem with its earnings.
When looking at the company’s assets compared to their liabilities they are in a tight place. The current year had total assets of 15.07 billion and total liabilities of 11.4 billion. It appears that the Total Debt/Total Asset ratio paints a negative picture on the company saying that 75% of the company is financed with debt and less with its equity. Looking at this could mean that they have a lower borrowing capacity. The company’s liabilities compared to their equity is 11.4 to 3.7 billion. The year before was a lot worse with 19.5 to 3.9 billion. Still this is not good because this means creditors have more leverage than its own shareholders. As you see below the graph shoes how much more leverage these creditors have.
The statement of cash flows shows a net income of 516 million with a net free cash flow of 2.02 billion for their operating activities. The investing activities have a net cash flow of -1.01 billion and the financing operations paid out 188 million in cash dividends with a net cash flow of -1.08 billion.
Safeway has always been one of the most popular supermarket chains in the United States. They have been on the Fortune 500 top 100 list many years running. The store has many competitors, but none as great as Wal-Mart. Wal-Mart is able to offer below market prices to its customers that Safeway cannot do without it eating into their profits, but Safeway has been very fortunate with its customer loyalty and offering quality products that the other chains are not offering. The company’s revenues have been increasing 43.6 billion up from 41 billion and their expenses were more than the previous year’s which gave them a net income of 518 million down from 2010 which was 590 million. The Profit Margin ratio and the Gross Profit to Sales ratio gives a good insight on the company’s ability to generate earnings. The graph here shows where the company is and that is does not have a problem with its earnings.
When looking at the company’s assets compared to their liabilities they are in a tight place. The current year had total assets of 15.07 billion and total liabilities of 11.4 billion. It appears that the Total Debt/Total Asset ratio paints a negative picture on the company saying that 75% of the company is financed with debt and less with its equity. Looking at this could mean that they have a lower borrowing capacity. The company’s liabilities compared to their equity is 11.4 to 3.7 billion. The year before was a lot worse with 19.5 to 3.9 billion. Still this is not good because this means creditors have more leverage than its own shareholders. As you see below the graph shoes how much more leverage these creditors have.
The statement of cash flows shows a net income of 516 million with a net free cash flow of 2.02 billion for their operating activities. The investing activities have a net cash flow of -1.01 billion and the financing operations paid out 188 million in cash dividends with a net cash flow of -1.08 billion.