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Professor: Dr . Sameer Mustafa, CPA, CGA, CMA, CGMA.

Section: PMBA - N70


Course: Basics of Accounting and Quantitative Methods
Group Names: Aradhana Chauhan, Sachin Kumar ,Aniruddha Rajeev
Gupte, Anuj Kumar Trivedi

Due Date: November 30, 2018

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TABLE OF CONTENTS

EXECUTIVE SUMMARY AND WHAT IS SWOT ANALYSIS .................................... 2


SWOT ANALYSIS OF SYMANTEC CORP. ................................................... 3
SWOT ANALYSIS OF CONSTELLATION SOFTWARE INC ............................ 4
LIMITATIONS OF SWOT ANALYSIS ............................................................ 5
INTRODUCTION ........................................................................................ 6
OVERVIEW OF CONSTELLATION SOFTWARE INC. ..................................... 7
OVERVIEW OF SYMANTEC CORP. .............................................................. 8
RATIO ANALYSIS ............................................................................................... 9
LIQUIDITY .................................................................................................. 9
SOLVENCY................................................................................................ 12
ACTIVITY ................................................................................................... 14
PROFITABILITY.......................................................................................... 18
EQUITY ANALYSIS ..................................................................................... 24
CONCLUSION ................................................................................................. 25
APPENDICES .............................................................................................. 27-31
APPENDIX-1 ............................................................................................. 27
APPENDIX-2 ............................................................................................. 28
APPENDIX-3 ............................................................................................. 29
APPENDIX-4 ............................................................................................. 30
APPENDIX-5 ............................................................................................. 31
REFERENCES ................................................................................................... 32

1
Executive Summary

In this paper we have analysed the situational and financial analysis of the
company using SWOT which are strength weakness opportunities and threats.
In this paper we have calculated the ratio’s and analysed the ratios from 2015
to 2017.The ratio’s analysed between two companies Constellation Software
Inc. and Symantec Corp. illustrates the industry average and competitors
present in the same industry in more detail. Moving forward this project
discusses company performance and the investments planning in the coming
years by interpreting and analysing the data which has been collected from
merchandise and Bloomberg gives you better understanding of the performance
of Constellation Software Inc.

What is SWOT Analysis:

SWOT Analysis is a strategic planning that can be conducted by


Constellation so as to identify current status of its internal and external factors,
it is an immensely interactive process which undergoes through Strengths(S),
Weakness(W), Opportunities(O) and Threats(T), that Constellation is facing
presently.

SWOT analysis has strength and weakness as the internal factors while
opportunity and threats are considered as external factors. The company
performs SWOT to safeguard constellation strengths, eliminate its weakness,
tackle threats and utilize opportunities.

2
SWOT ANALYSIS OF SYMANTEC CORPORATION

STRENGTHS:

 Strong brand portfolio as it can be beneficial for the company in its expansion and
growth. Brand Portfolio – Symantec corporation continuously working to develop a
strong
 Strong highly skilled workers base of approximately 13000.
 Effective reputation of incorporating complimentary firms through mergers and
procurement. It has effectively incorporated number of innovation organizations in
the previous couple of years.

WEAKNESS:

 A lot of working needs to be done in the marketing sector of this company


targeting its positioning and selling positions.
 The company needs to contribute much more so as to improvise its technologies
and for its expansion.
 Long term growth of Symantec corporation can be affected due to its number of
days to inventory is high comparing to its other competitors.

OPPORTUNITIES:

 Stability in free cash flow can be beneficial for the company as by using it company
can invest in new technologies and products, also can be used in improvising its
existing technologies.
 For some new advanced techniques comes as opportunity for Symantec corporation
to deal with them and acquire them for example, US election held through online and
because of the chances of hacking Symantec has the opportunity to become provide
solutions.
 As with the deploying of 5G there will be more cyber hack issues come so it will be an
opportunity for Symantec to expand and improvise their business.

THREATS:

 With the improving technologies threats are also increasing like attack on supply chain
can be grow in future so to deal with them is a challenge.
 Other small companies or manufacturers are trying to get into this industry due to
stable profitability which can provide new technologies at a cheaper rate as compare
to Symantec, this can be a major issue for the company to compete with all other new
and existing companies.

3
SWOT ANALYSIS OF Constellation Software Inc.

STRENGTHS OF CONSTELLATION SOFTWARE INC:

As constellation is one of the leading company in IT service industry, it has number off
strengths which help this company to succeed in its sector and also helps in protecting as
well as in increasing market shares.
 Successful business strategies -the business strategy of constellation to acquire
software start-ups is immensely successful.
 Innovative – the company frequently develop innovative solutions for its customers
so as to help them out.
 Strong free cash flow – As constellation has a strong free cash flow and it had
recently acquired ACCEO Solutions for $250 million and expanding every year this
suggests more acquisitions can take place in future.

WEAKNESSES OF CONSTELLATION SOFTWARE INC:

Weakness is the segment where constellation can understand about its limitations
and finds a way through strategic planning and by using swot analysis can improve
them.
 Unestablished broad portfolio – this is a weakness point for constellation
software as they don’t have an established broad portfolio to provide
exceptional returns to their customers and shareholders.
 Potential weakness- As constellation is heavily burden with competitors and
also company's size has made it less equipped to compete with numerous
competitors.
 Indulging in controversies- marketing is all about keeping promises but in case
of constellation the company cannot find itself without controversies, so this
can be a weakness which needs to be sorted out.

OPPORTUNITIES FOR CONSTELLATION SOFTWARE INC:

Opportunities is an external factor that is important for the company so as to grab the
new business strategies and implement them according to the current trends is necessary
when the company has numerous competitors.

4
 As many small companies come into the same business it has become tough for the
constellation to extract out profit by investing in the same way so there is an
opportunity for the constellation to expand towards Asia and have joint participation
with other software investor companies.
 Many new companies are establishing in different field in coming days there will be
more opportunity for the constellation to acquire them.
 Constellation is working on the same strategy since its being founded so this company
has an opportunity to diversify and can do some changes in their strategy to exploit
other companies and drag more future benefits.

THREATS TO CONSTELLATION SOFTWARE INC:

Threats are the external factors with which the business of a company can be affected,
and threats are those which a company should avoid obtaining maximum benefits.

 As the organization is working in various nations it is presented to money changes


particularly given the unstable political atmosphere in number of business sectors
over the world.
 Risk laws in various nations are unique and Constellation Software Inc might be
presented to different obligation claims given change in arrangements in those
business sectors.
 New innovations created by the contender or market disruptor could be a genuine
risk to the business in medium to long haul future.

LIMITATIONS OF SWOT ANALYSIS:

Despite the fact that the SWOT investigation is generally utilized as a key arranging
apparatus, the examination has a lot of restrictions.
 SWOT is a static evaluation - examination of the present state of affairs with couple
of planned changes. As conditions, abilities, dangers, and methodologies change,
the elements of a focused situation may not be uncovered in a solitary network.
 SWOT does not show to achieve a high ground, so it must not be an end in itself.
 Certain abilities or variables of an association can be both a strength and weakness
in the meantime. This is one of the significant confinements of SWOT examination.

5
INTRODUCTION

Constellation software provides software solutions to public sector as well


as private sector markets worldwide. It was founded by Mark Leonard in the
year 1995, for the first 10 years the company was private and then it went public
by the year 2006. This company has six operating segments – Volaris group,
Harris computer system, Jonas software, Vela software, Perseus operating
group, Total specific solutions. Constellation is a Canada based software
company but it operates in more than 100 countries with more than 125000
customers around thobe. Constellation software has approximately 13000
employees and generates US$2.1 billion as revenue, having such huge
competitors like ZTE, HCL, SYMANTEC etc Constellation managed to compete in
IT services by its business strategy of acquiring new software start-ups and hold
them for a long time, following this strategy company has acquired more than
260 start ups and has shown strong growth every year since being founded. The
purpose of this project is to perform a SWOT analysis in order to analyse the
internal and external environment and conduct a detailed analysis of
Constellation’s financial statements in terms of Liquidity, Activity, Solvency,
Profitability and Equity Analysis.

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Overview of Constellation Software Inc.
Constellation Software is an international provider of market-leading software and
services to a number of industries, both in the public and private sectors. Constellation
Software’s mission is to acquire, manage and build market-leading software businesses that
develop specialized, mission-critical software solutions to address the specific needs of our
particular industries.
Constellation Software company was founded in 1995 to assemble a portfolio of
vertical market software companies that have the potential to be leaders in their particular
market. Since then, Constellation Software have grown rapidly through a combination of
acquisitions and organic growth and established a strong constellation of companies with a
large, diverse customer base comprised of over 125,000 customers operating in over 100
countries around the world.
Constellation Software have six operating groups which currently service customers
in over 100 different markets worldwide. Constellation Software aggregate their business into
two distinct segments for financial reporting purposes: (i) the public sector segment, which
includes businesses focusing upon government and government-related customers, and (ii)
the private sector segment, which includes businesses focusing upon commercial customers.
With their headquarters in Toronto, Canada, and offices in North America, Europe,
Australia, South America and Africa, we have over 13,000 employees generating consolidated
revenues exceeding US$2.1 billion.

References:
http://www.mergentonline.com.ezproxy.viu.ca/companydetail.php?pagetype=history&com
pnumber=113820

http://www.csisoftware.com/overview/

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Overview of Symantec Corp:
Symantec is a provider in cybersecurity. Co. operates its business on a global civilian
cyber intelligence threat network that tracks a number of threats across the Internet from
mobile devices, endpoints, and servers. Co. is also developing solutions in markets such as
cloud security, digital safety, threat protection, identity protection, information protection
and cyber security services. Co.'s segments are: Consumer Digital Safety, which focuses on
providing a Digital Safety solution to protect information, devices, networks and the identities
of consumers; and Enterprise Security, which protects organizations, so they can conduct
business while utilizing new platforms and data.
Symantec Corporation (NASDAQ: SYMC), the world’s leading cyber security company,
allows organizations, governments, and people to secure their most important data wherever
it lives. Enterprises across the world rely on Symantec for integrated cyber defence against
sophisticated attacks across endpoints, infrastructure, and cloud. More than 50 million
people and families rely on Symantec’s Norton and LifeLock Digital Safety Platform to help
protect their personal information, devices, home networks, and identities at home and
across their devices. Software and Services Portfolio, Enterprise Security. Symantec protects
the Cloud Generation through our Integrated Cyber Defence Platform, the industry’s most
complete portfolio for securing cloud and on-premises environments. Symantec is committed
to conducting our business with respect and attention to ethical operation, a diverse and
inclusive workforce, the environment, and positive societal impact. We share our progress in
delivering on this commitment in our corporate responsibility report. The report describes
how we are taking action to address our priority issues and also serves as our annual
Communication on Progress (COP) as a signatory to the United Nations Global Compact.

References:
https://www.symantec.com/about/corporate-profile/business-overview
http://www.mergentonline.com.ezproxy.viu.ca/companydetail.php?pagetype=synopsis&co
mpnumber=59152

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RATIO ANALYSIS

LIQUIDITY RATIO :-
Liquidity refers to the ability of a firm to meet its short-term (usually up
to 1 year) obligations and unexpected cash needs over the short term. The ratios
which indicate the liquidity of a company, are current ratio, quick ratio is
discussed below. Liquidity is used to measure how solvent business is.

The Liquidity of the firm would be satisfactory if it is able to meet its


current obligations when they become due. A firm can be said to have the ability
to meet its short-term liabilities if it has sufficient liquid funds to pay the interest
on its short maturing debt usually within a year as well as to repay the principal.
This ability is reflected in the liquidity ratio of a firm. The liquidity ratio is
particularly useful in credit analysis by bank and other suppliers of short-term
loans. Liquidity are especially important to the creditors.

Current Ratio:
The ratio compares the current assets with the current liabilities. It is also
known as ‘working capital ratio ‘. It is expressed in the form of pure ratio. It is
used to measure short-term debt-paying capacity.

𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭𝐬
Current ratio =
𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬

Current ratio Schedule


Year Constellation Software Inc. Symantec Corp.
2015 0.72 1.22
2016 0.89 1.73
2017 0.85 1.15

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Current Ratio Analysis
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2015 2016 2017

Current ratio Constellation Software Inc. Current ratio Symantec Corp.

Interpretation:
If a company’s current ratio is greater than 1.0 then that indicates the
company is well-positioned to cover all of its current or short-term liabilities and
if the company’s current ratio is less than 1.0 that could be a sign of trouble if
the company runs into financial difficulty in the future. By having a quick analysis
of these current ratio’s of both companies it can be clearly understood that
Constellation Software Inc. has a low current ratio’s as 0.72,0.89,0.85 in all the
three years 2015, 2016 and 2017 respectively. So, here potential investors and
creditors need to analyze before investing because company will be in trouble
as its current assets will be less and current liabilities are more to pay the debt
and can be in loss. Company named Symantec Corp. has a good current ratio of
1.22, 1.73 and 1.15 in the years 2015, 2016 and 2017 respectively, which
explains that an analyst can easily invest, or creditors can give credit to such
companies who are able to cover their liabilities over assets. Thus, it clearly
explains that current ratio of Symantec Corp. is far better, and it is safe and
profitable to for the investors to invest and Creditors can provide credit to such
companies.

Quick Ratio :-

Quick Ratio is used to compare the quick assets with the quick liabilities.
It also known as pure ratio. The term quick assets refers to current assets , which

10
can be converted into cash immediately or at a short notice without diminution
of value or without any value strength. It represents the extent to which a
company can pay its current liabilities without relying on the sale of inventory.

𝐐𝐮𝐢𝐜𝐤 𝐀𝐬𝐬𝐞𝐭𝐬 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐀𝐬𝐬𝐞𝐭𝐬−𝐈𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐲−𝐏𝐫𝐞𝐩𝐚𝐢𝐝 𝐄𝐱𝐩𝐞𝐧𝐬𝐞𝐬


Quick ratio = =
𝐐𝐮𝐢𝐜𝐤 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬 𝐂𝐮𝐫𝐫𝐞𝐧𝐭 𝐋𝐢𝐚𝐛𝐢𝐥𝐢𝐭𝐢𝐞𝐬

Use of Quick Ratio – It is used to measure immediate Short-term Liquidity of the company.
Drawback – Ignores the timing of receipts and payments.

Quick ratio Schedule of two companies :


Quick Ratio
Year Constellation Software Inc. Symantec Corp.
2015 0.54 1.1
2016 0.72 1.63
2017 0.72 1.06

Quick Ratio Analysis


1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2015 2016 2017

Quick Ratio Analysis Constellation Software Inc.


Quick Ratio Analysis Symantec Corp.

Interpretation:
The quick ratio is more conservative than the current ratio because it
excludes inventory and other current assets, which generally are more difficult
to turn into cash. As per the data above, Constellation Software Inc. company’s
Quick Ratio in 2015 is 0.74 which is less than 1 means that the company is in

11
loss as this cannot currently fully pay back its current liabilities as we can also
observe in the years 2016 and 2017 the company’s quick ratio is 0.72 which
increased and being steady for the next year, had ratio less than 1 , which means
company is under heavy loss as it cant pay its debts whereas the quick ratio for
the Symantec Corp. company in 2015 is 1:1 which is considered as satisfactory
but this does not mean the company has a strong liquidity position because a
company may have high quick ratio but slow paying debtors. We can see there
is an increase in quick ratio in 2016 i.e. 1.63 which is greater than 1.5, which is
considered as the company has ability to cover each $1 of current liabilities and
potential investors and creditors should invest and provide credit to such
companies. Later in 2017, Symantec Corp. has a fine quick ratio but not too good
compared to 2016, however it can cover its depts over time. According to this
Symantec Corp. company is in profit and has good scope compared to the
Constellation Software Inc. when quick ratio is considered.

SOLVENCY ANALYSIS:

Solvency ratios measures a company’s ability to meet its longer-term


obligations. Analysis of solvency ratios provide insight on a company’s capital
structure as well as the level of financial leverage a firm is using. The firm is
mostly likely overburdened with debt and bondholders may force the company
into default.
Few Solvency Ratios allow investors to see whether a firm has adequate
cash flows to consistently pay interest payments and other fixed charges. If a
company does not have enough cash flows, the firm is most likely overburdened
with debt and bondholders may force the company into default.

Debt to Equity Analysis:


This ratio compares the long-term debts with shareholders fund. The
relationship between borrowed funds and owner’s capital is a popular measure
of the long-term financial solvency of a firm. This relationship is shown by debt
equity ratio. Alternatively, this ratio indicates the relative proportion of debt and
equity in financing the assets of the firm.

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𝐍𝐞𝐭 𝐃𝐞𝐛𝐭
Debt to Equity =
𝐒𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫 ′ 𝐬 𝐄𝐪𝐮𝐢𝐭𝐲

Debt to Equity Schedule:

Debit to Equity
Year Constellation Software Inc. Symantec Corp.
2015 1.05 0.35
2016 0.76 0.6
2017 0.39 2.35

Debt to Equity Analysis


2.5

1.5

0.5

0
2015 2016 2017

Debit to Equity Analysis Constellation Software Inc.


Debit to Equity Analysis Symantec Corp.

Interpretation:
High Debt to Equity ratio indicates that a company may not be able to
generate enough cash to satisfy its debt obligations. However, low debt to
equity ratios may also indicate that a company is not taking advantage of the
increased profits that financial leverage may bring. As per the data above,
Constellation Software Inc. company’s Debt to Equity Ratio in 2015 is 1.05 which
means that the company’s dependence on borrowed funds and its ability to
meet those financial obligations. Because debt is inherently risky, lenders and
investors tend to favour businesses with less debt to equity ratio. For lenders, a
low ratio means a lower risk of loan default and for the shareholders, it means
a decreased probability of bankruptcy in the event pf an economic downturn.
As we can observe from the above graph, in 2015, Constellation Software Inc.

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is 1.05 which means higher risk factor for the investors and later in the year
2016, this company has less debt to equity with a good start of using its capital
as it can been seen that it reached to 0.39 in 2017. However, Symantec Corp.
has a very low Debt to equity ratio in 2015 which is considered as a good factor
as it is using its capital inventory to gain profits and in 2016 Symantec Corp. Debt
to equity increased to 0.6 which is good investment of inventory but not as great
as compared to the year of 2015 of the same company. Later company failed to
manage its industry average. Hence therefore, may face some difficulties
securing additional funding from either source because the ratio is very high and
it steadily increased to a peak 2.35 in 2017.

Activity:
This shows the relationship between sales and the assets. It is also known
as turnover ratio’s and productivity ratios. Activity ratio’s measures the
effectiveness and intensity of the Firm’s management of its resources. Activity
ratios are used to measure how efficiently a company utilizes its assets. The
ratios provide investors with an idea of the overall operational performance of
a firm. The activity ratios are turnover ratio’s that relate an income statement
line item to a balance sheet line item. Income statement measures
performance over a specified period, whereas the balance sheet presents data
as of one point in time. To make the items comparable for use in activity ratios,
an average figure is calculated for the balance sheet data using the beginning
and ending reported numbers for the period. It measures the rate at which the
company is turning over its assets or liabilities. In other words, they present how
many times per year inventory is replenished or receivables are collected.

Accounts Receivables Turnover:


Accounts Receivable turnover ratio is calculated by dividing net revenue
by average receivables. This ratio is a measure of how quickly and efficiently a
company collects on its outstanding bills. The receivables turnover indicates
how many times per period the company collects and turns into cash its
customers’ accounts receivable.
𝐂𝐫𝐞𝐝𝐢𝐭 𝐒𝐚𝐥𝐞𝐬
Accounts Receivable Turnover =
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐬 𝐑𝐞𝐜𝐢𝐞𝐯𝐚𝐛𝐥𝐞

14
Accounts Receivable Turnover Schedule:

Receivables Turnover Analysis


Year Constellation Software Inc. Symantec Corp.
2015 7.84 6.4
2016 8.14 4.66
2017 7.82 6.69

Receivable Turnover Analysis


9
8
7
6
5
4
3
2
1
0
2015 2016 2017

Receivables Turnover Analysis Constellation Software Inc.


Receivables Turnover Analysis Symantec Corp.

Interpretation:
A profitable accounts receivable turnover ratio creates survival and
success in business. If the accounts receivable turnover increase means a
company is more efficiently processing credit and if accounts receivable
turnover decreases means a company is seeing more delinquent clients. From
the above graph Constellation company receivable turnover is good compared
to Symantec Corp. and but receivable turnover from 2015 to 2017 for the
Symantec Corp Inc. increased and company is more effective to process credit
than Constellation Software Inc.

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Inventory Turnover :
Inventory turnover is calculated by dividing cost of goods sold by average
inventory. A higher turnover than the industry average means the inventory is
sold at a faster rate, signaling inventory management effectiveness.

𝐂𝐨𝐬𝐭 𝐨𝐟 𝐆𝐨𝐨𝐝𝐬 𝐒𝐨𝐥𝐝


Inventory Turnover =
𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐬 𝐑𝐞𝐜𝐢𝐞𝐯𝐚𝐛𝐥𝐞𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐈𝐧𝐯𝐞𝐧𝐭𝐨𝐫𝐲

Inventory Turnover Schedule:

Inventory Turnover Analysis


Year Constellation Software Inc. Symantec Corp.
2015 22.9 15.21
2016 26.49 18.55
2017 30.33 16.76

Inventory Turnover Analysis


35
30
25
20
15
10
5
0
2015 2016 2017

Inventory Turnover Analysis Constellation Software Inc.


Inventory Turnover Analysis Symantec Corp.

Interpretation:
If Inventory turnover analysis is high , it means that the company’s
product is in demand and also mean that the company initiated an effective
advertising campaign or sales promotion that caused a boost in the sale which

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is for the Constellation Software Inc. as in 2015,2016 and 2017 inventory
turnover analysis increases from 22.9 to 26.49 and hence reaches a peak to
30.33 and shows increase in sales and marketing performance . However, for
Symantec Corp. will be expected the sales decreases as the inventory hold by
this company is higher. For the years 2015,2016 and 2017 Inventory turnover is
15.21, 18.55 and 16.76 respectively with low sales. Low inventory implies
company is holding inventory too much upon sales.

Accounts Payable Turnover:


Accounts payable turnover measures how quickly a company pays off the
money owed to suppliers. The ratio is calculated by dividing purchases (on
credit) by average payables.

𝐂𝐫𝐞𝐝𝐢𝐭 𝐏𝐮𝐫𝐜𝐡𝐚𝐬𝐞𝐬
Accounts Payable Turnover =
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐀𝐜𝐜𝐨𝐮𝐧𝐭𝐬 𝐏𝐚𝐲𝐚𝐛𝐥𝐞

Accounts Receivable Turnover Schedule:

Accounts Payable Turnover Analysis


Year Constellation Software Inc. Symantec Corp.
2015 7.07 25.87
2016 7.48 18.61
2017 7.39 22.7

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Accounts Payable Turnover Analysis
30

25

20

15

10

0
2015 2016 2017

Accounts Payable Turnover Analysis Constellation Software Inc.


Accounts Payable Turnover Analysis Symantec Corp.

Interpretation:

As from the above graph, for the Constellation Software Inc. it was clearly
understood that company has its accounts payable turnover as 7.047,7.48 and
7.39 in 2015, 2016 and 2017 years respectively. As the company has lower
accounts payable turnover ratio usually signifies that a company is slow in
paying its suppliers and potential investors and creditors should think before
investing or giving credit to such companies in the nearer future. However for
the competitors company i.e. Symantec Corp. has high ratio as in 2015 it has
accounts payable turnover as 25.87 and then in 2016 it decreased and paid slow
to the suppliers in that year and later it started paying their paying for their
relative short-term payments for their goods and supplies in 2017 as it had
increased from 2016 to 2017 from 18.61 to 22.7.

Profitability:
Profitability measures the income or operating success of the
enterprise. Profitability is the relation between profits and capital. Measuring
profitability means that you have to relate a profit to a resource. In short, profit
is the measure of gain and profitability the relation of this gain to the firm’s
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assets. If profitability exceeds the cost of the firm’s capital, that is the interest
rate at which it can borrow money, it can call itself successful.

Gross Profit Margin:


Gross profit margins simply gross income (revenue less cost of goods sold)
divided by sales revenue. The ratio reflects pricing decisions and product costs.

𝐆𝐫𝐨𝐬𝐬 𝐌𝐚𝐫𝐠𝐢𝐧
Gross Profit Margin =
𝐒𝐚𝐥𝐞𝐬 𝐑𝐞𝐯𝐞𝐧𝐮𝐞

Gross Profit Margin Schedule:

Gross Profit Margin( in %)


Year Constellation Software Inc. Symantec Corp.
2015 86.2 81.6
2016 87.1 82.9
2017 87.7 78.8

90
88 Gross Profit Margin
86
84
82
80
78
76
74
2015 2016 2017

Gross Profit Margin( in %) Constellation Software Inc.


Gross Profit Margin( in %) Symantec Corp.

19
Interpretation:
As from the graph it is clearly understood the company with higher Gross
Margin means company is reducing their cost of production or passing their cost
to the customers as Constellation Software Inc. company’s gross margin is
better, it has better control over the costs, compared to the competitors. High
profit margin of the Constellation Software Inc. indicates the company has good
strategy of pricing. In contrast, the competitor’s Gross profit Margin explains
that the company is under-pricing its goods.

Net Profit Margin:


Net Profit margin compares a company’s net income to its net
revenue. This ratio is calculated by dividing net income to sales revenue. It
measures a firm’s ability to translate sales into earnings for shareholders. Once
again investors should look for companies with strong and consistent net profit
margins.
𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞
Net Profit Margin =
𝐒𝐚𝐥𝐞𝐬 𝐑𝐞𝐯𝐞𝐧𝐮𝐞

Net Profit Margin Schedule:

Net Profit Margin( in %)


Year Constellation Software Inc. Symantec Corp.
2015 9.6 22.2
2016 9.7 69.1
2017 9 2.6

20
80
70
60 Net Profit Margin
50
40
30
20
10
0
2015 2016 2017

Net Profit Margin( in %) Constellation Software Inc.


Net Profit Margin( in %) Symantec Corp.

Interpretation:
In the years 2015,2016 and 2017 respectively the Net Profit Margin of the
Constellation companies are 9.6,9.7 and 9 respectively which means company
has very low net profit margin compared to the competitor’s net profit Margin
in the year 2015 as 22.2 and it increase to the peak in 2016 to 69.1 and thereafter
it decreases rapidly to the very lowest point of 2.6 which shows that the
Constellation Software Inc. company has bad Net Profit margin and the business
is pricing its products badly and can cause loss to the company, so Investors
should think before investing. But for the Competitor’s company i.e. Symantec
Corp. net margin was fine from 2015 to 2016 as it was increased from 22.2 to
69.1 but later it decreased steeply to 2.6 which shows very bad margin to the
company. From, the above comparison Constellation company has at least good
cost control over its goods and services pricing.

Return on Assets:
Return on assets is calculated as net income divided by total assets. It
is a measure of how efficiently a firm utilizes its assets. A high ratio means the
company is able to efficiently generate earnings using its assets.
𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞
Return on Assets =
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐓𝐨𝐭𝐚𝐥 𝐀𝐬𝐬𝐞𝐭𝐬

21
Return on Assets Schedule:

Return On Assets
Year Constellation Software Inc. Symantec Corp.
2015 11.54 6.45
2016 11.71 19.96
2017 10.64 -0.71

Return On Asset Analysis


25

20

15

10

0
2015 2016 2017
-5

Return On Asset Analysis Constellation Software Inc. Return On Asset Analysis Symantec Corp.

Interpretation:
From the graph, Constellation Software Inc. has return on assets ratio
in 2015,2016 and 2017 as 11.54 , 11.71 and 10.64 respectively which shows
steady decline in return on assets which means company was becoming
financially weaker but not as compared to the decline of the other competitor’s
company in 2017 and the competitor’s i.e. Symantec Corp. Return on assets
ratio in 2015 is 6.45 and in 2016 has dramatically increased to 19.96 which
shows growth company’s financial strength and efficiency . However, there is
decline in 2017 to (0.71) which indicates that company is not financially stable
in that year and had very hard times in paying debts. A low percentage return
on assets indicates that the company is not making enough income from the use
of its assets. A High Return on Assets is a tell-tale sign of solid financial and

22
operational performance. This is used by the investors to assess a company’s
financial strength and efficiency to use resources.

Return on Equity:
Return of equity measures net income less preferred dividends against
total stockholder’s equity. This ratio measures the level of income attributed to
shareholders put into the firm. It takes into account the amount of debt, or
financial leverage the firm uses. Financial leverage magnifies the impact of
earnings on ROE in both good and bad years.

𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞
Return on Equity =
𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐓𝐨𝐭𝐚𝐥 𝐒𝐡𝐚𝐫𝐞𝐡𝐨𝐥𝐝𝐞𝐫 ′ 𝐬 𝐄𝐪𝐮𝐢𝐭𝐲

Return on Equity Schedule:

Return on Equity Analysis


Year Constellation Software Inc. Symantec Corp.
2015 59.37 14.73
2016 51.89 51.92
2017 41.82 -2.97

Return Equity Analysis


70
60
50
40
30
20
10
0
-10 2015 2016 2017

Return on Equity Analysis Constellation Software Inc.


Return on Equity Analysis Symantec Corp.

23
Interpretation:
From the above Graph, it was clearly understood that the Constellation
Software Inc. has return of equity in 2015,2016 and 2017 as 59.37,51.89 and
41.82 respectively which is considered as good because of its measure of the
management’s ability to generate income from the equity available to it.
However, Symantec Corp. has 14.73 of ROE in 2015 and later ROE of the
Symantec Corp. increased to peak of 51.92 and thereafter it decreased to the
lowest in 2017 to (2.97) which indicates the industry has no capability and no
ability to generate income and has poor management measures.

EQUITY ANALYSIS:
The process of analysing sectors and companies, to give advice to
professional fund managers and private clients on which shares to buy. Sell-Side
analysts work for brokers who sell shares to the investors.

Basic Earnings per share:


Earnings per share measures the profits available to the equity
shareholders on each share held. It also Expresses the Corporation’s net income
after taxes on a per share of common stocks basis. The computation requires
the deduction of preferred dividends from the net income if a corporation has
preferred stock. Also requires the weighted averages number of shares of
common stock during the period of the net income.

𝐍𝐞𝐭 𝐈𝐧𝐜𝐨𝐦𝐞−𝐏𝐫𝐞𝐟𝐟𝐞𝐫𝐝 𝐃𝐢𝐯𝐢𝐝𝐞𝐧𝐝𝐬


Basic Earnings per share =
𝐖𝐞𝐢𝐠𝐡𝐭𝐞𝐝 𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐍𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐂𝐨𝐦𝐦𝐨𝐧 𝐒𝐡𝐚𝐫𝐞𝐬 𝐎𝐮𝐭𝐬𝐭𝐚𝐧𝐝𝐢𝐧𝐠

Basic Earnings Per Share Schedule:

Basic Earnings Per Share


Year Constellation Software Inc. Symantec Corp.
2015 8.36 1.27
2016 9.76 3.71
2017 10.47 -0.71

24
12
10
Basic Earnings Per Share
8
6
4
2
0
2015 2016 2017
-2

Basic Earnings Per Share Constellation Software Inc.


Basic Earnings Per Share Symantec Corp.

Interpretation:
Basic earnings per share for the Constellation company is 8.36,9.76
and 10.47 in the years 2015,2016 and 2017 respectively which is relatively
higher compared to the competitor’s Basic Earnings per Share in 2015,2016 and
2017 as 1.27, 3.71 and (0.71) respectively. The higher earnings per share ratio
defines the capability of generating a significant dividend for the investors and
it grows the business, higher ratio of basis earnings per share indicates a
potentially worthwhile investment, depending on the market price of the stock.
By this it can be clearly understood that Constellation Software Inc. has great
potential and investors can invest compared to the competitor’s ratio which is
relatively low in 2017.

CONCLUSION:

Although the Constellation Software Inc. faced significant difficulties,


the company has an attractive strength to be in the market and the resources
are used properly to restore the company’s profitability and growth. We also
examined as alarming weal, its problems with distributed systems and tolerated
poor management and later company picked up to get into the form. A Software
Company’s distribution system and management are the key factors for a

25
successful organization. The main threat is that competitors are growing
stronger while Constellation Software Inc. consumer satisfaction is decreasing
due to company’s weak and poor performances. The company has strong
control over the inventory uses and capital uses. Constellation Software Inc. has
best opportunity to capitalize its experience in Software Industry when
compared to the rivalry company, Symantec Corp. and Constellation Software
Inc. have simplified, innovative and growing approach under the application of
a new business plan which makes as a best opportunity that the industry to be
a front- runner again.

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APPENDIX-1

Source - Data of Symantec Corp. (Rivalry Company) from Mergent


online from VIU library Data sources.

27
APPENDIX-2

Source - Data of Symantec Corp.(Rivalry Company) from Bloomberg.

28
APPENDIX-3

Source - Data of Symantec (Rivalry Company) from Bloomberg.

29
APPENDIX-4

Source - Data of Constellation Software Inc. from Bloomberg

30
APPENDIX-5

Source - Data of Constellation Software Inc. from Mergent Online,


source extracted from VIU Library database.

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REFERENCES-

1.http://www.mergentonline.com.ezproxy.viu.ca/companydetail.p
hp?pagetype=history&compnumber=113820
2.http://www.csisoftware.com/overview/
3.https://www.symantec.com/about/corporate-profile/business-
overview
4.http://www.mergentonline.com.ezproxy.viu.ca/companydetail.p
hp?pagetype=synopsis&compnumber=59152
5. https://www.investopedia.com/university/ratios/liquidity-
measurement/ratio2.asp
6. https://www.aaii.com/journal/article/16-financial-ratios-for-
analyzing-a-companys-strengths-and-weaknesses.touch
7. https://yourbusiness.azcentral.com/
8. bloombergviuterminal@gmail.com

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