Dow Chemical Business Analysis Essay

Historically, the chemic application has operated in a agonistic environment, which is not anticipated to change. Dow experiences significant tilts in each of its operating segments as sanitary as in each of the geographic areas in which it operates. Dow competes ball-shapedly on the launching of quality, technology, price, and customer service and operates in an integrated manufacturing environment. Basic raw materials are affect through umpteen stages to produce many products that are sold as destroyed goods at different points in the process. Dow has ii major raw material streams that endure the return of the finished goods which are chlorine- found and hydrocarbon based raw materials. (Dow chemic Company, n.d.)Business environmentThe assembly line environment of Dow is one that has strategically positioned itself to withstand the ever-changing forces of economic, social, political and technical factors it faces daily. Dow consistently identifies opportunities a nd unfermented technologies before its competition which stimulates their sedulousness- leader position. (1)Financial HealthDow has great fiscal strength. Their sensible financial discip parenthood has proved beneficial in recent globular economic challenges and has actually helped position it for afterlife growth. The recent global economic challenges obligate Dow to take steps towards strengthening and diversifying its portfolio. The caller-up has come out on the early(a) side of the challenges with a portfolio that is better fitted out(p) for economic uncertainties. (Dow Chemical Company, n.d.)During 2011, Dow* had double-digit gains in revenue and earnings per share * post videotape revenues at a Company level, as well as in acclivitous geographies * introduced game-changing investments and partnerships that will allow the Company to trip up more demand in the universe of discourses fastest ontogenesis regions * recognise a stronger than ever before R&D pattern pipeline Analyzing the data attained from Dows 2011 financial statements suffer the Companys financial heath and sustainability.Dows runniness balance is a follows straighten outical Assets = 23,442 cardinal contemporary Liabilities = 13,634 one one thousand thousand one thousand cardinal one thousand thousand liquidity proportionality = 23,422/13,634 = 1.72Dow has $1.72 of on-line(prenominal) assets for both(prenominal) $1.00 of contemporary liability. The current balance should be at a 2 or greater to be considered a safety device(p) jeopardize however, Dow is a reputable global fundamental law accepting the investment to be a safe risk. Dows Acid-test proportionality is a follows change = 5,444 millionAccounts receivable = 4,900 million measurable Securities = 7,057 millionCurrent Liabilities = 13,634 millionAcid-test proportionality = 4,444+4,900+7,057/13,634 = 1.28Dow has 1.28 acid-test dimension. The dimension necessarily to be between a 0.05 and 1.0 to be satisfactory. The acid-test ratio determines whether an organization has exuberant short assets to coer immediate liabilities without interchange inventory. (Nickels, McHugh, & McHugh, 2010, p. 20-21) Dows ratio is undecomposed slightly higher up 1.0, allowing it to be considered satisfactory.Dows Debt to owners ratio is as follows innate Liabilities = 27,476 millionOwners justness = 22,281 millionDebt to owners ratio = 27,476/22,281 = 1.23 or 123%The debt to owners ratio should be anything 100% or less. (Nickels, McHugh, & McHugh, 2010, p. 20-21) Dow is just over however, other competitors in the industry throw away similar ratios signifying debt financing in the chemical industry is more acceptable and commonplace. Dows interpret on gross gross revenue is as followsNet Income = 3,200 millionNet sales = 52,985 millionReturn on sales = 3,200/52,985 = 0.06 or 6%Return on sales for Dow is slightly rase than its researched competitors in producing income from sales.C ompetitorsAs previously stated, the chemical industry is a highly competitive environment. dickens of Dows leading competitors include BASF and DuPont. BASF is the servicemans leading chemical partnership with about 111,000 employees and just under 370 production sites worldwide. BASF serve customers and partners in al closely each country in the world. In 2011, BASF posted sales of $73.5 billion. (BASF web site) BASFs Liquidity ratio is a followsCurrent Assets = 27,088 millionCurrent Liabilities = 16,447 millionLiquidity ratio = 27,088/16,477 = 1.64BASF has $1.64 of current assets for every $1.00 of current liability. The current ratio should be at a 2 or greater to be considered a safe risk however, BASF is a reputable global organization considering the investment to be a safe risk. (Nickels, McHugh, & McHugh, 2010, p. 20-21) BASFs Acid-test ratio is a followsCash = 2,048 millionAccounts Receivable = 10,886 millionCurrent Liabilities = 16,477 millionAcid-test ratio = 2,048+10 ,886/16,477 =. 78BASF has a .78 acid-test ratio. The ratio needs to be between a 0.05 and 1.0 to be satisfactory. The acid-test ratio determines whether an organization has enough short-term assets to broaden immediate liabilities without selling inventory. (Nickels, McHugh, & McHugh, 2010, p. 20-21) BASFs ratio is in line and right where it should be furthermore, considered satisfactory in regards to this measure. BASFs Debt to owners ratio is as follows issue forth Liabilities = 35,790 millionOwners equity = 25,385 millionDebt to owners ratio = 35,790/25,385 = 1.41 or 141%The Debt to owners ratio should be anything 100% or less. (Nickels, McHugh, & McHugh, 2010, p. 20-21) BASF is just over however, other competitors in the industry have similar ratios signifying debt financing in the chemical industry is more acceptable. BASFs Return on sales is as followsNet Income = 6,188 millionNet gross sales = 73,497 millionReturn on sales = 6,188/73,497 = 0.08 or 8%Return on sales is high er than Dows and lower than DuPont. Another strong competitor is DuPont. DuPont is a world leader in market-driven innovation and science. DuPont brings science and engineering to the global food market through innovative products, materials and services which alter their customers in almost all industries to chance the current and upcoming needs of society. (DuPont.com) DuPonts Liquidity ratio is a followsCurrent Assets = 18,058 millionCurrent Liabilities = 11,185 millionLiquidity ratio = 18,058/11,185 = 1.61DuPont has $1.61 of current assets for every $1.00 of current liability. The current ratio should be at a 2 or greater to be considered a safe risk however, DuPont is a reputable global organization permitting the investment as a safe risk. (Nickels, McHugh, & McHugh, 2010, p. 20-21)DuPonts Acid-test ratio is a followsCash = 3,586 millionAccounts Receivable = 4,598 millionMeasurable Securities = 433 millionCurrent Liabilities = 11,185 millionAcid-test ratio = 3,586+4,598+43 3/11,185 = .77DuPont has a 0.77 acid-test ratio. The ratio needs to be between a 0.05 and 1.0 to be satisfactory. The acid-test ratio determines whether an organization has enough short-term assets to cover immediate liabilities without selling inventory. (Nickels, McHugh, & McHugh, 2010, p. 20-21) DuPonts ratio is satisfactory.DuPonts Debt to owners ratio is as followsTotal Liabilities = 39,899 millionOwners Equity = 8,593 millionDebt to owners ratio = 39,899/8,593 = 4.64 or 464%The Debt to owners ratio should be anything 100% or less. (Nickels, McHugh, & McHugh, 2010, p. 20-21) DuPont is importantly over this desired range at 464%, indicating that the significantly financed based on borrowed monetary resource that must be paid back. In comparing this ratio to industry competitors, DuPont is notwithstanding considerably over. DuPonts Return on sales is as followsNet Income = 3,474 millionNet Sales = 37,961 millionReturn on sales = 3,474/37.961 = 0.09 or 9%DuPonts return on sales is strong when comparing DuPont to Dow and BASF.Technological AdvantagesDows innovation sets them apart from the competition on numerous levels. Dow is the worlds * largest and most experienced ethylene and chlorine producer * largest producer of chlorine and caustic* leader in the production of purified ethylene oxideAs of December 31, 2011, Dow owned a fall of 18,120 patents world-wide. These patents protect the results of its research. The conjunction had revenue related to patents and technology royalties of $437 million in 2011.Today, Dows innovation efforts further supports a wise level world-wide growth, generates strong cash flows and enables them to exploit or bring the technologies to the market. (Dow Chemical Company, n.d.) Dows innovations from 2011 include * DOW POWERHOUSE Solar tremble a solar panel which esthetically looks like a shingle for the trapping industry. * PASCAL Technology a new polyurethane insulating solution to boost zipper efficiency in applia nces. * EVOQUE Pre-Composite Polymer Technology allows paint manufactures to maximize hiding efficiencies. GlobalizationIn an effort to satisfy the demands of a growing world, Dow is putting their innovations to work on every continent. In 2011, 32% of sales were gained from emerging geographies. Dows increasing investment into true and emerging regions of the globe is empowering them to take receipts and capitalize on growth where it is happening. (Dow Chemical Company, n.d.)BenchmarkingDows vast and well-balanced portfolio enables the company to face the complex realities of straightaway and the future head-on. The company has united its businesses with geographies and end-markets for significant growth. Dow is commercializing game-changing technologies today that are delivering real value to the fag line. In 2011 nearly one-third of its sales were from products launched in the last five days reinforcing their strategic goals.DuPont is an industry leader in safety. DuPont quickly realized that in enact for the organizations safety brain to be successful, safety had to be embraced from the top down. The safety culture of the company has turn up successful in many areas. In 2000, over 90% of DuPonts sites world-wide, operated with zero in injuries, an unheard of accomplishment. In addition, DuPont has leveraged its acclaimed safety platform and had provided safety training to other companies including common Motors, GE and Alcoa, Inc. (Vinas, 2002)ConclusionDow is the third largest chemical company in the world. The healthy business environment fosters sustainability for decades to come. Dow offers financial and technological strengths with a promising future in the world-wide market.ReferencesNickels, W. G., McHugh, J. M., & McHugh, S. M. (2010). instinct Business (9th ed.). McGraw-Hill. Dow Chemical Company. (n.d.). Retrieved from http//www.dow.com BASF Chemical Company. (n.d.) Retrieved from http//www.basf.com DuPont. (n.d.) Retrieved from h ttp//www.dupont.comVinas, T. (2002, Summer). outflank Practices DuPont safety starts at the top. Industry Week, (), Retrieved from http//hhtpwww.industryweek.com/articles/best_practices__dupont_safety_starts_at_the_top