SWM - Mark Moore

Ratio Performance Trend Gross Profit Margin Average Decreasing Operating Expense Ratio Average Decreasing Operating Profit Margin Slightly Underperforming Increasing Net Profit Margin Average Increasing Asset Turnover Underperforming Increasing Return on Assets Slightly Outperforming Stable Return on Equity Underperforming Volatile Internal Growth Rate Average Increasing Sustainable Growth Rate Underperforming Volatile Overall Underperforming Increasing Capital Structure AnalysisWhen evaluating a firm’s financial leverage, capital structure analysis becomes a criticalelement. Capital structure ratios are used in obtaining how well a company is using their debtand equity to finance their operations and manage their credit risk. There are three main ratiosto help utilize this analysis for Schweitzer-Mauduit; debt-to-equity ratio, times interest earned,and the debt-to-service margin. The debt-to-equity ratio will be used to assess Schweitzer-Mauduit’s credit risk, the times interest calculation to evaluate its ability to pay off its interestwith income from operations, and the debt-to-service margin to see how it’s paying off itscurrent portions of long-term debt. After these ratios are examined, the final step in evaluationis determining the Altman’s z-score, which is used to analyze the risk the firm has to becomingbankrupt. These in turn will be the key factors in Schweitzer-Mauduit’s capital structureanalysis.131