This means that Ferrellgas is in risk of default. The company paid more in dividends last year than it earned in cash from operations. In short, Ferrellgas has an unsustainable burn rate. While Inergy had a poor financial position, it was able to tap into capital markets to alleviate any cash crunch -- Ferrellgas has yet to do this and of all these firms is the closest to default.
Amerigas is a mediocre performer among this group. While the company has very little cash and a low current ratio, it is earning enough to cover its interest. It is also paying less in dividends than its cash flow from operations, although it is probably paying too much given its earnings level and apparent need for capital expenditures. However, there are red flags with this company as well. For example, given its current cash situation, one would want to see an improving cash conversion cycle, and that is not the case as both inventory and receivables turn are worsening. It is also worth considering that Amerigas is less indebted than is Ferrellgas.
The company with the strongest financial position is Suburban. That company has a healthy balance sheet, good margins, good interest coverage and although it has a declining profit and revenue it has managed to keep its financial condition relatively healthy.
3. This does not appear to be a good industry in which to invest. Net incomes in the industry are declining, and...
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