Hancock Holding Company: 2011

(BHC ID 1086533)

Hancock Holding Company: 2011

Industry 2011

The above diagrams depict the five profitability ratios of both the industry and Hancock holding company at the end of December 2011. In regards to Asset turnover, Hancock holding company is performing under the industry average. Asset turnover represents the amount of dollars the bank is making for each dollar’s worth of assets it has. The higher the asset turnover the better. The reason the asset turnover for Hancock may be lower than that of the industry is the difference in profit margin. Companies with higher profit margins tend to have a higher asset turnover. Asset turnover is equal to revenue divided by assets. Profit Margin is equal to net income divided by revenues. The profit margin of 11.44% means that for every dollar Hancock Company makes approximately $00.11 of revenue. The profit margin also shows us that the industry is able to control its cost almost twice as well as Hancock Company.

The equity multiplier indicates that on average the industry is using more debt to finance it’s assets. In other words, investors may be more interested in investing in Hancock since it is slightly less risky than the industry. ROA is a measure of how well a company is allocating its assets to make profits. It is equal to net income over total assets; a larger percentage is desirable. A company with a larger percentage is allocating its resources more efficiently. The ROA of the Industry more than doubles that of Hancock Holding Company.

ROE is similar except that it is calculated by dividing net income by shareholders equity. It is a measure of how efficiently the company is using the investments of shareholders to make profits. Again, a higher percentage is more desirable. Again, the industry nearly doubles the ROE of Hancock, showing that on average other companies are using the investments of their shareholders more wisely. In summary a look at all the performance ratios (excluding the equity multiplier) show that the Hancock Holding Company is performing below the industry and it would be good for investors to seek out other investment options that are more profitable.

Figure 1:

Hancock Holding Company 15

Figure 2:

Industry 15

Figure 3:

Ratio Analysis 15

Interpreting the Trends

Between the