FIN650 Grand Canyon Five Point Holding Inc Financial Ratios Analysis Original question: Financial ratios are essential to provide an accurate valuation of

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FIN650 Grand Canyon Five Point Holding Inc Financial Ratios Analysis Original question:

Financial ratios are essential to provide an accurate valuation of a firm. Select a publicly traded firm of your choice. Select one ratio each in the areas of (a) performance, (b) activity, (c) financing, and (d) liquidity warnings. Provide an evaluation of the selected firm’s strengths and weaknesses. Based on the ratios you selected, how well does your chosen firm perform? Explain

Reply to this response: APA using one reference.

FivePoint Holdings

Performance:

Profit Margin: 129.91%

FivePoint is currently exceeding its costs by 129.91%. Meaning they are bringing in more than they are spending.

Activity:

Total Assets Turnover: 6.11%

This ratio tells us the efficiency of asset utilization within the company. Based off this small ratio percentage, with sales only reaches 6.11% of its total assets, FivePoint can compare to competitors to efficiency.

Financing:

Debt Ratio: 22.27%

Only 22.27% of FivePoint’s total assets are funded by debt, a relatively low amount.

Liquidity:

Operating cash flow ratio: 5.42%

With the operating cash flow under 100%, FivePoint will likely have a liquidity problems. Their current cash flow does not meet the needs to sustain current obligations unless cash from operations improves in the future.

Based on the ratios I selected to evaluate FivePoint, they are exceeding in performance, activity, and financing. The company is bringing in more than it is spending. FivePoint is a land development company that develops and sells of the land in which they hold as an asset, the low asset turnover ratio indicated they have only made a small dent in total asset sells, meaning they long term opportunities for revenue. Their liquidity ratios are low because they have invested majority into development of their land, and are only selling small portions at a time, thus the ratio is low. FivePoint is on track to see continued growth and is currently performing very well.

References:

Yahoo Finance. (2018). FPH Key Statistics | Five Point Holdings, LLC Class Stock – Yahoo Finance. Retrieved from https://finance.yahoo.com/quote/FPH/key-statistics?p=FPH

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