CARMANAH TECHNOLOGIES
FINANCIAL ANALYSIS
Earnings Per Share ?
Over the past five years Carmanah has failed to generate earnings for its common shareholders. From 2002 ? 2006 earnings per share has remained marginally above zero, most recently falling into the negative. The company is currently in a growth stage; therefore, when the company is not operating at a loss as they were in 2006 profits earned are retained and reinvested into equity capital.
Profit Margins/Gross Margins
Through the acquisition of Soltek Powersource Ltd, Carmanah experienced a dramatic increase in sales for 2005 (Statement of Earnings). In 2006 Carmanah's sales had increased by 965% compared to 2002. Cost of Goods sold also increased during this time period by 1492% resulting in a significant decrease in gross profit margin from 2004 ? 2006. As a result of diminishing gross profit margins and increased operating expenses the company has experienced a consistent reduction in profit margin since 2004 (Ratio Analysis).
Return on Assets
Carmanah has not been effective at using their assets to generate earnings. In 2004 the company earned a return on assets of 3.88%. Following the acquisition of Soltek in 2005, Carmanah's ability to generate a return on assets suffered(Ratio Analysis). From 2004-2006 Carmanah's total assets increased by 281% (Trend Analysis), yet earnings did not improve. This is a clear indicator that management is still learning and developing a strategy to help them increase ROA by using new assets more effectively.
Return on Shareholders Equity
Carmanah Technologies is currently in the growth stage. As a result earnings are retained for reinvestment into capital equity. As result of earnings being retained and the ...