Accounts Analysis: The U.S Energy Corp & DTE Energy CO (Coursework Sample)

Accounts Analysis: The U.S Energy Corp & DTE Energy CO
Student’s Name
Professor’s Name
The U.S Energy Corp & DTE Energy CO
Quiz 1
The U.S energy Corp was organized in 1966 as an independent energy company. The main activity is to acquire and develop natural gas and oil in the U.S. The company deals with gas and oil projects and the interest of working may change according to the change of project lease the operation contract. The firm’s commercial activities are concentrated on North Dakota and South Texas ("USEG.OQ - U.S. Energy Corp. Profile | Reuters", 2020). DTE Energy was incorporated in Michigan in 1995. Its utility operations comprise of DTE gas and DTE electrics; it also has other categories relating to energy. Both companies provide their financial reports every year. The following discussions are based on the reports.
Profitability ratios
Profitability ratios are financial metrics that are used to analyze and measure if a company can earn profit in relation to revenue, operating costs, assets in the balance sheet, and capital during a given financial year. These ratios show how the company can utilize assets to create value for shareholders and generate profit. Different companies use different profitability ratios to provide insight into the financial health of a company.
Gross profit margin ratio for U.S Energy Corp
Gross profit can be resolved by finding the difference between all expenses (the products sold costs) from the sales.
Gross profit= (revenue-Cost of Goods sold) /Revenue ×100%
Company
name

Financial period

Revenue $

Cost of goods $

Gross profit/loss %

U.S.E
DTE.E

2016
2016

5,746
10,630

17,675
9,185

(207%)
13%

U.S.E
DTE.E

2017
2017

6,545
12,607

7,533
10,896

(15%)
13%

U.S.E
DTE.E

2018
2018

6,573
14,212

7,363
12,618

(12%)
11%

U.S.E
DTE.E

2019
2019

5,539
12,669

6,686
10,962

(21%)
13%

Net Profit margin Ratio
Also commonly known as the profit after tax (PAT), Net profit is calculated by finding the difference between all expenditures and sales income. Net profit margin is solved by finding the quotient of the incoming net profit by the volume of the revenue of sales.
Net profit (PAT) = Sales revenue-(direct expenses +indirect expenses)
Net profit margin= PAT/Revenue ×100%
PAT
Company name

Financial period

Revenue

Total Expenses

Net Profit/ loss(PAT)

U.S.E
DTE.E

2016
2016

5,746
10,630

19,920
9,371

(14,174)
1,259

U.S.E
DTE.E

2017
2017

6,545
12,607

12,817
11,176

(8272)
1,431

U.S.E
DTE.E

2018
2018

6,573
14,212

7,515
12,963

(942)
1,249

U.S.E
DTE.E

2019
2019

5,539
12,669

7,675
11,329

(2136)
1,340

Net profit margin
Company name

Financial year

PAT

Revenue

Net profit/loss margin %

U.S.E
DTE.E

2016
2016

(14,174)
1,259

5,746
10,630

(246%)
12%

U.S.E
DTE.E

2017
2017

(8272)
1,431

6,545
12,607

(126%)
11%

U.S.E
DTE.E

2018
2018

(942)
1,249

6,573
14,212

(14%)
9%

U.S.E
DTE.E

2019
2019

(2136)
1,340

7,675
12,669

(27%)
10%

Liquidity Ratios
Liquidity ratio is the accounting tool that is used to determine the ability to repay debts. The various types of liquidity ratios are the current ratio and acid test ratio or quick ratio.
Current ratio
Current ratios are used to show if a company can meet its short-term obligations using its short term assets.
Current ratio= (current assets)/Current liabilities
Company name

Financial year

Current Assets

Current liabilities

Current Ratio

U.S.E
DTE.E

2016
2016

4,889
1,337

10,392
2,437

0.47
0.55

U.S.E
DTE.E

2017
2017

5,918
1,446

1,582
2,812

3.74
0.51

U.S.E
DTE.E

2018
2018

3,260
3,081

3,082
4,438

1.05
0.69

U.S.E
DTE.E

2019
2019

3,420
3,086

2,180
3,997

1.57
0.77

Acid Test ratio
Acid test ratios test the ability of a company to utilize its short term assets to cover for their current liabilities.
1540790147010Acid test ratio/quick ratio= cash+ cash equivalents+ current receivables
Current liabilities
Company name

Year

cash

Cash equivalent

Current receivables

Current liabilities

Quick ratio

U.S.E
DTE.E

2016
2016

1,940
2,084

2,142
53

(968)
1,212

10,392
2,437

0.3
1.4

U.S.E
DTE.E

2017
2017

2,154
2,117

3,227
(24)

358
2,111

1,582
2,812

3.6
1.5

U.S.E
DTE.E

2018
2018

1,650
2,680

2,340
(13)

45
1,005

3,082
4,438

1.3
0.8

U.S.E
DTE.E

2019
2019

968
3,025

2,136
56

(256)
325

2,180
3,997

1.3
0.9

Leverage
Leverage ratios help in determining the relative debt levels incurred by a business. A high ratio indicates that the business has taken huge debts than what it can afford; this means that it will not be able to service its future obligations. These ratios include debt to capital and debt to assets.
Debt to capital
It is calculated by dividing the company's liabilities by shareholders' equity.
Debt to capital/equity= Total liabilities/ shareholders’ equity
Company name

Year

Total liabilities

Shareholders’ equity

Debt to equity

U.S.E
DTE.E

2016
2016

13,009
29,026

3,758
9,499

3.5
3.1

U.S.E
DTE.E

2017
2017
...