Week2 BUSFIN Assignment Example | Topics and Well Written Essays - 250 words

Week2 BUSFIN - Assignment Example This profitability ratio also shows the declining performance of Las Vegas Sands Corporation. However, the performance on the company is dependent on economy’s performance therefore we cannot conclude that this lackluster performance will continue in the future. As for the solvency is concerned, the company has experienced a declining debt to equity ratio which implies that shareholder’s still place trust on the company and they hold great expectation from the company in the future. Although a D/E ratio greater than 1 is not desirable but Las Vegas Sands Corporation should consider on reducing this ratio to increase its credit worthiness. The financial leverage ratio is similar to Debt to Equity ratio except the fact that it takes equity into the account. These ratios are implying that the company is solvent and can sustain the business in the future through its financing capabilities. The interest coverage ratio shows that the number of times a company’s EBIT can cover its interest expense. In year 2008, the company had a positive EBIT but they were not sufficient to cover the interest expense which implies that they were facing a liquidity crisis. Furthermore, in year 2009 the interest coverage ratio further reduced to -0.089 due to its operating expenses being greater than its gross profit. The company needs to concentrate on controlling its operating expenses in order to be