Financial Analysis

Ratio

Formula

Year 2006

Year 2005

Interpretation

1,018,583 = 0.66
1,534,568

There is a great increase on the

comapny's capacity to meet its
short term obligation.
However, a ratio lower than 1
means that the liquid assets are
not enough to cover all
maturing debts.

1,006,758 = 0.59
1,534,568

Shows that there is no

significant change in inventory
level because the diferrence in
Current Ratio and Quick Ratio
for 2005 and 2006 is both
0.26.

Liquidity Ratios

Current
Ratio

Quick
Ratio

Current Assets 1,514,751 = 0.92

Current Liabilities 1,648,100

Current Ass. Inv. 1,396,292 = 0.85

Current Liabilities 1,648,100

Leverage Ratios
Debt to
Total
Assets

Debt to
Equity

Total Liabilities
Total Assets

The company is levered both

2005 and 2006. MGM Mirage
18,296,689 = 0.83 17,464,348 = 0.84
depends large portion of its
22,146,238
20,699,420
financing for operations from
outside borrowers.

The decrease in the ratio

signifies that funds provided
by the owners for operations
Total Liabilities
18,296,689 = 4.75 17,464,348 = 5.40 have increased more than
Total Stockholders
3,849,549
3,235,072
those provided by creditors.
Equity
However, the ratio is still big
showing how capital intensive
the industry is.

The company has increased

the portion of quity in its long
term capital structure
Long
Long Term Debt 12,994,869 = 3.38
12,355,433 = 3.82 compared to its long term
Term Debt Total Stockholders 3,849,549
3,235,072
debt. Still, we can see how
to Equity
Equity
currently aggressive MGM is
in financing its growth with
debt.
Activity Ratios
Inventory
Turnover

Ratio not applicable because it

does not suit in the industry
itself

Fixed
Asset
Turnover

Total
Asset
Turnover

Sales
Fixed Assets

There is proportional increase

in sales as PPE is increased.
7,175,956 =
6,128,843 =
The difference in ratio shows
17,241,860
16,541,651
that the company has been
0.4162 or 41.62% 0.3705 or 37.05% more effective in using the
investment in fixed assets to
generate revenues

Sales
Total Assets

The small ratio is common for

mutimillion and capital
7,175,956 =
6,128,843 =
intensive industries. As shown,
22,146,238
20,699,420
the increase in ratio indicates
0.3240 or 32.40% 0.2961 or 29.61% the effieciency of the company
in deploying all its assets to
obtain revenues

Profitability Ratios
Net Profit
Margin

Return on
Assets

Net Income
Sales

648,264 =
7,175,956
0.0903 or 9.03%

Net Income
Total Assets

648,264 =
22,146,238
0.0293 or 2.93%

It shows that the percentage of

443,256 =
Sales converted into income
6,128,843
after considering cost has
0.0723 or 7.23%
increased from 2005 to 2006.
443,256 =
20,699,420
0.0214 or 2.14

This is a disadvantage to the

company. This can be the
result of not effectively
controlling cost and expenses

Reveals that the additional

Net Income
648,264 =
443,256 =
money invested by the
Return on
Total Stockholders
3,849,549
3,235,072
shareholders have increased
Equity
Equity
0.1684 or 16.84% 0.1370 or 13.70% the profitability of the
company
EPS

Net Income
Common Stock
Outstanding

648,264 =
283,909,000
0.0022833

443,256 =
285,059,516
0.00155490