MetLife Financial Ratios example

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MetLife Financial Ratios

Founded in 1868, MetLife Inc. has become one of the global leading companies in the area of life insurance, employee benefits, annuities, and asset management. The company has a wide network of affiliates and
subsidiaries, which operate in North America, Latin America, Asia (in particular, in Japan), the Middle East and Europe. The company provides a variety of financial and insurance services, namely, life, property and
casualty, disability, dental, stable value, guaranteed interest and annuities (Metlife Inc. Annual Report 2015, 2016). Such a wide range of provided services together with sound financial indicators makes MetLife
Inc. one of the most well-known and reliable insurance companies in the world.

Although the company’s profit margin has been volatile during 2011-2015 (varying from 2% in 2012 to 10% in 2011), its level is relatively high for an insurance company. Starting from 2012, it demonstrated an upward
tendency and was equal to 9% and 8% in 2014 and 2015 respectively.

The degree of financial leverage is used to assess a company’s earnings per share sensitivity. The higher the indicator of the DFL, the higher a company’s financial risk. Due to large investments in 2012, MetLife’s DFL was very high. However, during the following years, the indicator became more stable (1.16 in 2014 and 1.19 in 2015), which demonstrates a relatively high level of financial independence.

Another important indicator of financial stability is liquidity. The recent increase in the value of two liquidity ratios (current ratio and quick ration) shows that the company has sizable current assets, while its liabilities are mainly long-term. This fact demonstrates its current financial stability and is typical for a big insurance company.
MetLife’s Asset Utilization Ratio is stable and low – 9% in 2011 and 8% in 2012-2015. Although the ratio is relatively low, this level is common for the healthcare insurance industry, while it also shows that the
company’s efficiency over time is constant.

Despite a moderate decrease in 2013, the company’s ratio of working capital turnover is constantly increasing. It demonstrates the fact that MetLife is boosting the effectiveness of using its working capital over time. Once again, the indicator proves the financial stability of this insurance company.

References
Metlife Inc. Annual Report 2015. (2016) (1st ed.). Retrieved from
http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_MET_2015

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