Essay Sample on Weis Markets and Chicago Rivet-Valuation

Weis Markets Inc. is a regional grocery chain based in the Mid-Atlantic in Sunbury, Pennsylvania state in the United States of America. The company has retail stores in Maryland, New York City, Virginia, West Virginia, New Jersey, and Delaware. Chicago Rivet and Machine Inc. is a manufacturing company based in Naperville, Illinois, in the United States of America. The company operates in Albia, Iowa, Pennsylvania, and Tyrone. The application of financial concepts such as return on equity assists in analyzing the strengths and weaknesses of a company using data from its financial accounts and other financial reports (Kung and Wen 2007, pp. 842-852).

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Return on equity also contributes to making sound decisions on the performance of a company. Such economic concepts are essential in giving a precise recommendation on the performance of an organization. Economic drawbacks and market uncertainties are common phenomena in business and are factors that contribute to the performance of a firm. It is vital to assess key performance indicators to highlight the viability of a company and its future growth. Applying the return on equity (ROE) analysis, this paper intends to examine the productivity and viability of the two companies (Forster, 1996).

The Weis Company History Background

Weis Markets Inc. deals in a diversity of products such as groceries, frozen foods, seafood, floral, bakery, fuel, dairy and deli, meats, fresh producers, pharmacy services, beer and wine, and health and beauty care. The company was founded by two brothers, namely Harry and Sigmund, in 1912. The company adapted to the changes in the market fast by shifting to self-service stores in the early twentieth century. The company embarked on consolidating its stores into supermarkets in the 1940s (Forster, 1996). Weis Markets Company started acquiring other companies in 1967 when it acquired Albany Public Markets Inc. Weis faces fierce competition from other companies like Giant (Carlisle) and Stauffer's of Kissel Hill.

Chicago Rivet History Background

Chicago Rivet and Machine Co. began as a builder of brake lining and harness rivets in 1920. We built our first rivet setting machine in 1925. The Model 912 was first launched in 1946 and is the most comprehensive line of automatic riveters. The first Model 912 built by the company is still in operation up to the present day. The company became public in 1930. Its shares currently trade on the NYSE. Chicago Rivet supplied fasteners and other munitions (Forster, 1996). The company is involved in the production and sale of assembly of equipment and automated assembly systems and a complete selection of straps. Chicago Rivet Co. is known for quality and reliability since 1920, and they depend on the expertise of their engineering department to solve the most challenging fastener problems (Ellinger, Yang, & Howton, 2002).

Return on Equity

Much higher performance on equity signals anomalies in the company and sends a warning signal that something unusual is enhancing its number such as recent acquisitions, buying back stock, and so on (Kung and Wen 2007, pp. 842-852). Financial professionals have argued that firms that have a high return on equity with little or no debt relative to investment have the capability of growing without significant capital expenditures.

Return on equity allows the shareholders of the business to take freshly created surplus cash and reinvest it elsewhere. Companies with better marketing and lower risks produce more free cash flow or owner earnings, thus cautioning the investor from the incredible consequences of market changes (Ruf, et al., 2001, pp. 143-156). Return on equity equals the assets minus liabilities. Return on investment is used to indicate a business' productivity concerning equity.

Return on equity for Weis Market Inc. for the fiscal years 2003, 2004, and 2005 are calculated as shown below:

Return on equity for the year 2005: $ 788,487 - $184,630 = $ 603,857

Return on equity for the year 2004: $ 748,482 - $ 176,782 = $ 571,700

Return on equity for the year 2003: $ 744,315- $ 168,867 = $ 575,448

Return on equity for Chicago Rivet Inc. for the fiscal years 2003, 2004, and 2005 are calculated as shown below:

Return on equity for the year 2005: $ 27,922 - $4,344 = $ 23,578

Return on equity for the year 2004: $ 29,299 - $ 4,482 = $ 24,817

Return on equity for the year 2003: $ 28,138- $ 4,149 = $ 23,989

The above figures depict that Weis Markets Inc. is performing well whereas the Chicago Rivet co. is not that progressive and is stagnant in its productivity. Weis Market posted an increase in its total equity between 2004 and 2005, an indication of growth and value for investment (Forster, 1996). Chicago Rivet Co. posted a decrease in its total equity between 2004 and 2005, an indication that improvement is essential for the company to create value for its investment.

Conclusion

To fully understand the performance and general well-being of a company, an investor must look at the financial position of that company. In the modern-day, investors study keenly a company's performance and wealth creation using international financial standards to evaluate the performance of the company and project on its future. Analyzing the financial statements of the companies and the footnotes in the financial accounts is significant for projecting and planning a company's future and investment prospects.

Data from Weis and Chicago Rivet financial accounts explores future market uncertainties and volatility that is likely to impact on its performance. Financial ratios that indicate a company's liquidity, cash flows, and net profit ratios are some of the best standards for appraising the performance of a company. Further research should be done to improve on the models and financial concepts that enable easy evaluation of a company's performance and future viability.

References

Ellinger, A.D., Ellinger, A.E., Yang, B. and Howton, S.W., 2002. The relationship between the learning organization concept and firms' financial performance: An empirical assessment. Human resource development quarterly, 13(1), pp.5-22. Retrieved from: https://onlinelibrary.wiley.com/doi/abs/10.1002/hrdq.1010

Forster, D. L. (1996). Capital structure, business risk, and investor returns for agribusinesses. Agribusiness: an international journal, 12(5), 429-442. Retrieved from https://onlinelibrary.wiley.com/doi/abs/10.1002/ (SICI) 1520-6297(199609/10) 12:5%3C429: AID-AGR3%3E3.0.CO; 2-8

Kung, C.Y. and Wen, K.L., 2007. Applying grey relational analysis and grey decision-making to evaluate the relationship between company attributes and its financial performance-a case study of venture capital enterprises in Taiwan. Decision Support Systems, 43(3), pp.842-852. Retrieved from https://www.sciencedirect.com/science/article/pii/S0167923607000048

Ruf, B.M., Muralidhar, K., Brown, R.M., Janney, J.J. and Paul, K., 2001. An empirical investigation of the relationship between change in corporate social performance and financial performance: A stakeholder theory perspective. Journal of business ethics, 32(2), pp.143-156. Retrieved from https://link.springer.com/article/10.1023/A:1010786912118