Capital Corp Merchant Banking Story

The decrease overall was not a poor decision if the divestment of those assets would then allow May’s to be more resourceful with the assets remaining.

Calculating the profitability ratios of May’s to show the combined effects of liquidity, asset management and leverage on May’s operating results concluded this analysis. It was not surprising to find all the ratios completed, including profit margin as well as return on assets (ROA) and return on equity (ROE) all decreased the first full fiscal year after the merger took place. A Du Pont analysis demonstrated the ROE of May’s decreased from 12.4% before the merger to 7.41% after the merger.

Solely on profitability and efficiency measures one may conclude the merger was not successful, as many top management decisions and extra costs may have hurt May’s in the short-term. On the other hand the potential cost savings and better efficiencies in the long-term allowed me to conclude May’s would have a strong future.