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Financial Analysis of Scholastic and Daktronics Essay

Project id 1014716
Subject area Other
Document type Essay
Words 2996
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Assessing a company's financial condition can be carried out by looking in its profitability or its ability to satisfy long-term commitments. These measures can be viewed through an analysis of a company's financial statements, including the balance sheet and income statement. This paper will look at the standing of Scholastic Company's (Scholastic) ability to satisfy its long-term responsibilities and in the forefront of Daktronics, Inc. (Daktronics). This paper will include a number of financial ratio calculations and an evaluation of the notable trends. Additionally, it will talk about the profitability and long-term borrowing positions of those companies discussed. Scholastic Company is a multibillion dollar children's book publisher and distributor with over 9,000 worldwide employees (Scholastic Inc., n.d.). Scholastic leases some of its physical office and storage locations and equipment (as cited in Gibson, 2011). Cornaggia, Franzen, and Simin (2013) noted the reasons firms lease may be the result of a company's financial distress which prevents sufficient capital being raised to purchase instead of leasing. They also suggested if profitability of the firm isn't at issue, leasing may be used to reduce taxes thus reducing borrowing costs. Although the reason for maintaining material lease obligations isn't disclosed in its financial statements (as cited in Gibson, 2011), Scholastic's ability to fulfill its long-term commitments is very important to investors, creditors, and management. The long-term borrowing capacity of Scholastic can be determined through an analysis of its times interest earned, fixed charge coverage, and debt ratios. The times interest earned ratio uses a company's income statement to evaluate its capacity to fulfill long-...

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