Maytag Corporation 2002:Focus on North America Essay

2788 Words Mar 9th, 2010 12 Pages
Case 3 :Maytag Corporation 2002:Focus on North America

Questions: Does Maytag Corporation have what it takes to succeed in this increasingly competitive industry? Is this a good time to buy or to sell Maytag stock?

Answer:

I would like to start the answer of this question through a small summary which will show how and why these questions are appeared? and since, giving precise answer to the questions need a detailed environmental analysis ,so I try to explain internal and external factors , and through analyzing the current strategy I aim to recommend some strategies for Maytag company to succeed in his increasingly competitive industry and finally as a result of mentioned analysis I answer the first and second questions.
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The net profit margin, gross profit margin, and return on sales are all decreasing. Also, the quick ratio is low. Maytag’s financial position has been damaged by all the debt the company has had to take on to finance acquisitions.

Maytag Financial Analysis

Liquidity Ratios 2001 2000 1999 1998 1997

Current Assets 1.275 1.108 1.198 1.225 1.650

Quick Ratio 0.858 0.773 0.724 0.740 1.032

Inventory to Net 1.518 3.102 2.398 2.154 0.951

Working Capital

Cash Ratio 0.102 0.006 0.034 0.036 0.049

Profitability Ratios

Net Profit Margin 0.011 0.050 0.081 0.069 0.053

Gross Profit Margin 0.232 0.273 0.292 0.290 0.275

Return on Inv 0.015 0.075 0.125 0.108 0.072

Return on Sales 0.067 0.110 0.141 0.128 0.105

Return on Equity 2.027 9.271 0.769 0.553 0.293

Activity Ratios

Inventory Turnover 9.654 12.280 10.030 10.604 9.731

Days of Inventory 534.251 488.683 822.206 780.768 712.521

Net Working Capital 14.654 38.093 24.056 22.840 9.259

Turnover

Asset Turnover 1.447 1.474 1.397 1.397 1.397

Fixed Asset Turnover 2.683 2.797 2.524 2.524 2.524

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