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Subject Code
Professor’s Name
Date
Ratio Analysis
{Current Assets/
{(Net Account
Profitability Ratios
{158273/
{71460/
stockholders Common
{Dividends/ Weighted
{Cash Dividends
declared on common
Payout ratio stock/ Net Income} 24149/23076 1.05 43675/ 71460 0.61
Solvency Ratios
earned Expense/ Interest Expense) 6)/ 2750} 12.16 3776)/ 2671} 32.91
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Alibaba Group Company was incorporated in 1999 with the aim of sharing a believed
that internet would offer everyone equal chance through enabling small businesses to leverage
technology and innovation to grow and compete more effectively in both local and international
market ("Alibaba Group.", N.p). Since launching, it has substantially facilitated small Chinese
exporters, entrepreneurs and manufacturers to sell globally hence making the company to
become an international leader in mobile and online commerce. Currently, the company, as well
as its subsidiaries, runs the biggest retail and wholesale business in cloud computing and online
marketplaces, entertainment, digital media, innovation initiatives and others. The Chief
Executive Officer of Alibaba, Mr. Ma, owns around 7.8% of the shares in Alibaba as well as
46% of the shares of the Alipay electronic payment affiliate (Graphics, WSJ.com. N.p).
Notably, financial ratios greatly help a company to evaluate the overall performance of their
investment that is vital in establishing the future direction of the company. It is therefore
imperative that ratios are computed to use them in monitoring the performance of various
a. Accordingly, Alibaba’s current ratio significantly fell from 3.58 in FY2014/2015 to 1.95
obligations was becoming low ("Balance Sheet For Alibaba Group Holding Ltd ADR
(BABA) From Morningstar.Com.", N.p). However, the ratio remains good given that the
b. The quick ratio fell from 3.46 in FY2014/2015 to 1.84 in FY206/2017 signifying that the
dollar amount available to the company was decreasing thus could be faced with
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financial challenges in the operation of the daily activities ("Balance Sheet For Alibaba
c. The amount of receivable turnover for Alibaba.com fell from 11.65 to 9.56 during the
FY2014/2015 and FY2016/2017 is indicating that the more customers were currently
paying cash to the company than taking goods on credit terms ("Balance Sheet For
d. Alibaba.com inventory turnover ratio rose from 2.99 to 7.46 during the FY2014/2015
and FY2016/2017 demonstrating that the company was generally making a more sales in
the current financial year than in the previous period and thus generating more profit
margins for the company ("Balance Sheet For Alibaba Group Holding Ltd ADR
e. The profit margin fell from 1.05 in the FY2014/2015 to 0.91 in the FY2016/2017
signifying that the company was directing more finances to capital venture ("Balance
Sheet For Alibaba Group Holding Ltd ADR (BABA) From Morningstar.Com.", N.p).
f. The asset turnover ratio fell significantly from 0.42 during the FY2014/2015 to 0.05 in
decreasing in the market, therefore, affecting the overall growth of the company
("Balance Sheet For Alibaba Group Holding Ltd ADR (BABA) From
Morningstar.Com.", N.p).
g. Alibaba’s return on common stockholders equities fell from 0.10 during the
FY2014/2015 to 0.06 in the FY2016/2017 showing that the value of common stock in
the market was reducing thus affecting negatively the share prices of the company
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("Balance Sheet For Alibaba Group Holding Ltd ADR (BABA) From
Morningstar.Com.", N.p).
h. The earning per shares (EPS) of Alibaba greatly rose from 0.10 to 1.03 during the
FY2014/2015 and FY2016/2017 is indicating that there was an increased in the value of
shareholders in the company ("Balance Sheet For Alibaba Group Holding Ltd ADR
i. Alibaba.com Price-Earnings (P-E) ratio increased from 0.94 during the FY2014 to 0.96
in the FY2016/2017 showing that there was an increased in the overall performance of
the company in the marketplace ("Balance Sheet For Alibaba Group Holding Ltd ADR
j. The ratio of debt to assets of the company rose from 0.43 in the FY2014/2015 to 0.45
during the FY2016/2017 indicating that the company was using more borrowed capital
than their internally generated resources ("Balance Sheet For Alibaba Group Holding
k. The ratio of time interest earned of the company rose from 12.16 during the
FY2014/2015 to 32.91 in the FY2016/2017 signifying that the burden of taxes for the
company was substantially reduced in the current period as compared with the previous
financial year.
Recently, Alibaba Group Ltd indicated that they had made total sales of around $25.3
billion from its five technologies that operate 24 hours through Alipay payment platform. This
shows that there was an upsurge of 39% relative to 2016 ("5 Technologies That Were Key to
Alibaba Clocking $25.3 B GMV in 24 Hours", N.p). However, the aggregate mobile gross
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merchandise volume that was established through Alipay transacted 90% of the aggregate gross
merchandise volume. Accordingly, this achievement by Alibaba was linked with their system's
capability to control the spike of more than 325,000 requests per seconds during high season
emanating from the constant stress test ("5 Technologies That Were Key to Alibaba Clocking
4. Company Strengths
The brand image of Alibaba.com well known in the market and that it involves operates
business-to-consumer. The overall financial health of Alibaba.com as indicated above shows that
There is general rise of competition in the market from JD.com and Tencent as well as Amazon
and eBay. Moreover, the economic stability of Chinese would greatly determine the success of
the Alibaba business performance in the future (Bhasin & Hitesh., N.p). Imperatively, the
company has will not significantly depend on the economic performance of China since it has
established itself internationally and hence resulting in little or no effect on the local setting.
From the above ratio analysis, it is clear that the financial health of Alibaba Company
remains good. This is because the rate of return of asset was increasing from 0.13 to 0.33 the
FY2014/2015 and FY2016/2017 respectively ("Cash Flow For Alibaba Group Holding Ltd ADR
(BABA) From Morningstar.Com.", N.p). Therefore, it is recommended that investors who want
to buy the share of the company should proceed and make the purchased.
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Work cited
Graphics, WSJ.com. "What Is Alibaba?." 2017, retrieved on November 15, 2017, from
http://projects.wsj.com/alibaba/.
https://yourstory.com/2017/11/alibaba-global-shopping-technologies/
"Cash Flow For Alibaba Group Holding Ltd ADR (BABA) From
http://financials.morningstar.com/cash-flow/cf.html?t=BABA®ion=usa&culture=en-US.
"Balance Sheet For Alibaba Group Holding Ltd ADR (BABA) From
http://financials.morningstar.com/balance-sheet/bs.html?t=BABA®ion=usa&culture=en-US
http://www.alibabagroup.com/en/about/history.