The company that I chose to study this semester is Medifast, Inc. This company produces
and sells a
weight-loss management plan, meal replacements & vitamins. They are also currently
producing a
sports nutrition line.
In looking through the financials, a couple of things stood out to me. In 2014, both
inventory and
revenue went way down. Some of this seems to be from discontinued operations, as the
liabilities from
discontinued operations went way up with the long term liabilities. Revenues for the year
went down by
almost $4million. That’s a little over a 10% decrease from 2013.
In spite of the decrease in revenues and inventory, the current ratio, while it did worsen,
was still
showing an ability for the company to pay its current debt three times over. This showed
that in spite of
a decrease in production, the company was still remaining profitable. However, in 2014,
they would
have to liquidate a higher percentage of its assets in order to pay down its liabilities.
One good thing about the company is that their accounts receivable is normally relatively
low. They
have customers pay up front instead of making installments. AR did however have a slight
increase in
2014, but they were selling more products, so it could be retailers, and not actual
customers.
After reviewing this company, I do not think I would invest. It seems that they are trying to
stay relevant
and provide customers with new and exciting products, such as the sports nutrition line,