Understanding Financial Statements
Objective:
Analyzing the financial statements of ProtoLabs and compare it with NN Inc to understand various ratios and how it affects the decisions of investors and creditors.
About the Company:
ProtoLabs was founded by Larry Lukis, as The Protomold Company in 1999. Larry is a successful entrepreneur who was previously a part of a $100 million company whose aim was to design a better printer but was constantly floored by the time it took to obtain the injection molding parts. He then went on to develop a process which would not only take less time to produce injection molding parts but also reduce the costs for product that do not require large quantity. With a rapid growing base the company developed technology to create bigger and more complex parts and introduced Firstcut CNC machining services. The company now provides 3 kinds of services i.e. Additive manufacturing, CNC machining and injection molding. The company went public in year 2012.
Liquidity Analysis:
Liquidity ratios are used to determine the ability of a firm to payoff its short-term debts. The rule of thumb is that the higher the liquidity ratio, the more is the firm considered safe.
Current Ratio:
The current ratio measures the company’s ability to pay of its long term and short-term debts. The current ratio takes into account all the current assets of the company (liquid and non-liquid) in comparison to current liabilities. The Formula for calculating current ratio is:
Current Ratio= Current Assets
Current Liabilities
ProtoLabs Current Ratio:
Current assets for year ending 2014(in thousands) = 108,344
Current Liabilities for year ending 2014(in thousands)= 18,759
Current assets for year ending 2013(in thousands)=109,795
Current liabilities for year ending 2013(in thousands)=13,663
Year 2014 Year 2013
108,344 = 5.775...