Reorganizing Wheeling Pittsburgh
Ratio Analysis
Perform traditional comparative and trend analysis as well as multivariate financial statement analysis for 1980 to 1990. Can you analyze the performance of Wheeling Pittsburgh in a manner that reveals if WHX was heading towards distress before 1985?
The table below shows calculated financial ratios for the period 1980-1990. Calculation details include:
* ROE was calculated using Reported Net Income prior to preferred dividends and Total Common Equity without including Minority Interest or Preferred Stock * ROA was calculated using Reported Net Income prior to preferred dividends * ROE and ROA use Average Common Equity and Average Assets in the denominator, respectively * Total Debt includes the Current Portion of Long-term Debt and Long-term Debt * Total Capital includes Total Debt, Total Common Equity, and Preferred Stock. * EBITDA-CEx stands for EBITDA minus Capital Expenditures.
After improving Y/Y in 1981, WHX financial performance severely deteriorated in the period 1982-1983. Financial metrics mostly improved in 1984, led by revenue growth and margin expansion. However, the damage done the prior 2 years was severe enough to send the company to a distressed state. After annual increases during 1980-84, leverage reached a peak in 1984 as shown by Debt/Equity of 209.8% and Debt/Capital of 60%. EBITDA during 1982-84 was not enough to cover 1 year of interest expenses. ROE was increasingly negative during 1982-84.
Liquidity and cash balances deteriorated, primarily impacted by dismal profitability and increased cash conversion cycle (decreased efficiency) during 1981-83. The charts below show the evolution of cash balances, cash flow from operations, cash conversion cycle, total capital and leverage for the period 1980-1984.
In summary, the analysis of financial ratios and trends for the pre-bankruptcy period 1980-1984 clearly shows severe deterioration in WHX’s financial performance. EBITDA coverage was
Perform traditional comparative and trend analysis as well as multivariate financial statement analysis for 1980 to 1990. Can you analyze the performance of Wheeling Pittsburgh in a manner that reveals if WHX was heading towards distress before 1985?
The table below shows calculated financial ratios for the period 1980-1990. Calculation details include:
* ROE was calculated using Reported Net Income prior to preferred dividends and Total Common Equity without including Minority Interest or Preferred Stock * ROA was calculated using Reported Net Income prior to preferred dividends * ROE and ROA use Average Common Equity and Average Assets in the denominator, respectively * Total Debt includes the Current Portion of Long-term Debt and Long-term Debt * Total Capital includes Total Debt, Total Common Equity, and Preferred Stock. * EBITDA-CEx stands for EBITDA minus Capital Expenditures.
After improving Y/Y in 1981, WHX financial performance severely deteriorated in the period 1982-1983. Financial metrics mostly improved in 1984, led by revenue growth and margin expansion. However, the damage done the prior 2 years was severe enough to send the company to a distressed state. After annual increases during 1980-84, leverage reached a peak in 1984 as shown by Debt/Equity of 209.8% and Debt/Capital of 60%. EBITDA during 1982-84 was not enough to cover 1 year of interest expenses. ROE was increasingly negative during 1982-84.
Liquidity and cash balances deteriorated, primarily impacted by dismal profitability and increased cash conversion cycle (decreased efficiency) during 1981-83. The charts below show the evolution of cash balances, cash flow from operations, cash conversion cycle, total capital and leverage for the period 1980-1984.
In summary, the analysis of financial ratios and trends for the pre-bankruptcy period 1980-1984 clearly shows severe deterioration in WHX’s financial performance. EBITDA coverage was