Income statement
The income statement tells us that the revenues for Papaya are increasing steadily over the years. Operating revenues are also increasing. Most importantly, operating expenses are going down. The most important part in this plays the amortization/depreciation area, which dropped by almost half from 2011 to 2012. Papaya managed to cut its cost of services as well. It also reduced the number of its employees, since its labor cost went down as well. These numbers tell us that Papaya was trying to cut costs in order to be more profitable. Looking at net profit, it has succeeded as 2013 was the only year it had a profit. Lowering fixed costs played an important part in this.
Balance sheet
Papaya’s long term assets grew from 2011 to 2013. The most significant change was in the intangible assets, which grew by 9 million EUR from 2012 to 2013. Tangible assets, however, dropped by 6 million EUR. The most significant increase was in short term assets, which increased by 14 million EUR from 2011 to 2013. This was mostly due to cash they had available, as this increased for 8.5 million EUR.
Papaya’s equity increased by 5.5 million EUR from 2011 to 2013. This is mostly due to increasing net profit. Liabilities have increased by 5 million EUR on average per year. Long term liabilities have increased by 4 million EUR. Short term liabilities increased by 8 million EUR or 2.5%. This was mostly due to interest bearing borrowings, which increased three times. Short term operating liabilities decreased by 5%.
Financial ratios
Both current and quick ratios remained mostly unchanged and above 1, which means that the company would be able to pay off all of its short term debts. The company is financially stable. The company on average has 71 days until it gets paid by its clients, but takes 91 days to pay its obligations. This gives Papaya more flexibility in terms of cash flow and short term investments.
Profitability increased the most. Operating margin...