Dow Chemical Business Analysis Essay

Historic all in ally, the chemic industry has operated in a competitive environment, which is not anticipated to change. Dow experiences significant competitions in distributively of its operating segments as well as in each of the geographical areas in which it operates. Dow competes globally on the foundation of quality, technology, price, and customer service and operates in an integrated manufacturing environment. Basic raw materials are processed through many stages to produce many products that are sold as finished goods at different points in the process. Dow has two major raw material streams that founder the production of the finished goods which are chlorine-based and hydrocarbon based raw materials. (Dow chemical substance party, n.d.) wrinkle EnvironmentThe business environment of Dow is one that has strategically blank spaceed itself to withstand the dynamical forces of economic, social, political and technological factors it faces daily. Dow consistently identif ies opportunities and new technologies before its competition which stimulates their industry-leader position. (1) monetary HealthDow has great fiscal strength. Their sensible pecuniary discipline has prove beneficial in recent global economic challenges and has actually helped position it for future growth. The recent global economic challenges forced Dow to take locomote towards strengthening and diversifying its portfolio. The follow has come out on the another(prenominal) post of the challenges with a portfolio that is better equipped for economic uncertainties. (Dow Chemical Company, n.d.)During 2011, Dow* had double-digit gains in revenue enhancement and earnings per share * postedrecord revenues at a Company level, as well as in uphill geographies * introduced game-changing investments and partnerships that will award the Company to capture more demand in the beingnesss fastest growing regions * recognized a stronger than ever before R&D asylum pipeline Analyzing th e data attained from Dows 2011 financial statements confirm the Companys financial heath and sustainability.Dows runniness proportion is a follows flow rate Assets = 23,442 zillion oc received Liabilities = 13,634 one thousand one jillion cardinalfluidity proportion = 23,422/13,634 = 1.72Dow has $1.72 of current assets for every $1.00 of current liability. The current symmetry should be at a 2 or greater to be considered a base hit risk however, Dow is a reputable global organization evaluate the investment to be a safe risk. Dows Acid-test symmetry is a followsCash = 5,444 millionAccounts Receivable = 4,900 millionMeasurable Securities = 7,057 millionCurrent Liabilities = 13,634 millionAcid-test symmetry = 4,444+4,900+7,057/13,634 = 1.28Dow has 1.28 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 spread everyplace flying liabilities without exchang e inventory. (Nickels, McHugh, & McHugh, 2010, p. 20-21) Dows ratio is provided slightly above 1.0, allowing it to be considered satisfactory.Dows Debt to owners ratio is as follows centre Liabilities = 27,476 millionOwners Equity = 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 have similar ratios signifying debt pay in the chemical industry is more acceptable and commonplace. Dows bring to on sales is as followsNet Income = 3,200 millionNet gross revenue = 52,985 million lapse on sales = 3,200/52,985 = 0.06 or 6%Return on sales for Dow is slightly lower than its researched competitors in producing income from sales.CompetitorsAs previously stated, the chemical industry is a highly competitive environment. Two of Dows leading competitors include BASF and DuPont. BASF is the worlds leading chemical ca ller-out with about 111,000 employees and just under 370 production sites worldwide. BASF serve customers and partners in approximately every country in the world. In 2011, BASF posted sales of $73.5 billion. (BASF network 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 cover immediate liabilities without selling inventory. (Nickels, McHugh, & McHugh, 2010, p. 20-21) BASFs ratio is in line and repair where it should be furthermore, considered satisfactory in regards to this measure. BASFs Debt to owners ratio is as followsTotal 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 Sales = 73,497 millionReturn on sales = 6,188/73,497 = 0.08 or 8%Return on sales is high 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 grocery through innovative products, materials and services which enable their customers in almost all industries to meet the current and future 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+433/11,185 = .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 l iabilities 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 significantly over this desired prescribe at 464%, indicating that the significantly financed based on borrowed funds that must be paid back. In comparability this ratio to industry competitors, DuPont is still intimately 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 many levels. Dow is the worlds * largest and most experienced ethene and chlorine manufacturing busines s * largest producer of chlorine and caustic* leader in the production of purified ethylene oxideAs of December 31, 2011, Dow owned a total of 18,120 patents world-wide. These patents protect the results of its research. The company had revenue related to patents and technology royalties of $437 million in 2011.Today, Dows innovation efforts further supports a new 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 Shingle a solar panel which aesthetically looks like a shingle for the housing industry. * PASCAL Technology a new polyurethane insulating solution to boost energy efficiency in appliances. * EVOQUE Pre-Composite Polymer Technology allows winder 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 cont inent. In 2011, 32% of sales were gained from emerging geographies. Dows increasing investment into developed and emerging regions of the globe is empowering them to take advantage 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 veryities of now 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 bottom line. In 2011 nearly one- trio of its sales were from products launched in the last five years reinforcing their strategic goals.DuPont is an industry leader in sanctuary. DuPont quickly realized that in order for the organizations safety mindset to be successful, safety had to be embraced from the top down. The safety socialisation of the company has proven successful in many areas. In 2000, over 90% of D uPonts sites world-wide, operated with zero injuries, an unheard of accomplishment. In addition, DuPont has leveraged its acclaimed safety design and had provided safety training to other companies including General 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). Understanding communication channel (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 http//www.dupont.comVinas, T. (2002, Summer). Best Practices DuPont safety starts at the top. Industry Week, (), Retrieved from http//hhtpwww.industryweek.com/articles/best_practices__dupont_safety_starts_at_the_top