Apex Printing Financial Analysis

This paper is an analysis of Apex’s financial ratios. These ratios have been compared to
other companies within the organization to provide a comparative analysis and provide sufficient
information to directors that they can use to make decisions. The two companies that have been
considered in this analysis are QuadGraphics Incorporated (QUAD) and Deluxe Graphics
(DLX). Both are incorporated in the United States and operate in Apex’s industry under NAICS
classification code 323111 (commercial printing). Apex’s ratios have been computed for 2012
and 2013 to provide a trend analysis that the company can use to compare its performance for the
two years under analysis. The ratios that have been included have been described in the below
analysis. Financial data for both companies has been sourced from the Securities and Exchange
Commission (SEC) Electronic Data Gathering and Retrieval system (EDGAR).

Current ratio

A current ratio is a kind of liquidity ratio used to assess a company’s ability to meet its
short-term obligations. The ratio compares a company’s current assets and current liabilities. It is
computed as:

Current ratio = Current assets /Current liabilities

(Long-term) debt to equity ratio

The debt-to-equity ratio measures the level at which the company is leveraged. This ratio
compares a company’s long-term debt against equity. It is computed as (Long term
debt/shareholders equity)

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Gross margin percentage

Gross margin is the profit that the company makes after deductions of the cost of sales. It
is expressed as a percentage of the revenues. It is computed as (Gross margin/Revenues) * 100
where gross margin = Revenues – the cost of sales

Net profit margin percentage

Net profit margin is also computed as a percentage of sales. It aims to measure the
percentage of earnings that a company makes after the cost of sales, interest, tax, depreciation,
and amortization have been deducted. It is computed as (net income/revenues) * 100

Return on equity percentage

The return on equity is a ratio used to measure how much wealth has been created for
equity holders or shareholders in a company. It is a percentage expressed as (net income/
Shareholders equity) * 100.

Ratio Apex Printing Deluxe Corporation
(SEC 2014a)

Quad/Graphics Inc
(SEC, 2014b)
2012 2013 2012 2013 2012 2013
Current Ratio 1.29 1.13 0.998 0.65 1.31 1.21
Debt to Equity 1.57 0.65 1.50 0.69 0.98 0.98
Gross margin (%) 15.68% 21.7% 64.38% 64.59% 22.2% 20.72%
Net margin (%) 1.36% 5.83% 11.25% 11.77% 1.37% 0.64%
Return on Equity
(%)

10.26% 31.04% 39.38% 33.91% 7.07% 2.4%

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The table above shows the comparative results for the ratios described above. The results
above describe that Apex’s ratios are comparable with other companies in the industry. Apex’s
financial performance improvement can be observed in the ratios, which are better in 2013 than
in 2012. The profitability ratios (net profit margin, gross profit margin, and return on equity) for
2013 are better for Apex than in 2012, demonstrating that Apex was more profitable in 2013. A
lower debt to equity ratio is better for the company since it indicates lower risk, which means
that Apex was less risky in 2013. It shed off a significant part of its long-term debt. However,
Apex needs to increase the value of its assets to achieve a better debt to asset ratio. Its debt to
asset ratio is better than Deluxe’s, but Quadgraphic’s is superior. From the ratio analysis, Deluxe
corporation seems to be the more profitable company, performing better in all profitability ratios
than both Apex printing and Quadgraphics. Therefore, the directors at Apex printing may find
Apex’s financial results competitive and comparable to the company.

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References

Securities and Exchange Commission (SEC). (2014). Deluxe Corporation – Annual Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year
ended December 31, 2013. Sec.Gov. Retrieved June 5, 2022, from
https://www.sec.gov/Archives/edgar/data/0000027996/000002799614000013/a20131231
10-k.htm#s1ACE25D75A43331C4ECE5829B56678F0
Securities and Exchange Commission (SEC). (2014b). Quad/Graphics Inc – ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 For the fiscal year ended December 31, 2013. SEC.Gov. Retrieved June 5, 2022,
from
https://www.sec.gov/Archives/edgar/data/0001481792/000148179214000008/a12312013
form10k.htm#s8ADCC9A9372419640C30B3EE3B3A2E75