This website uses cookies to ensure you have the best experience. Learn more

Ratio And Financial Statement Analysis

2513 words - 11 pages

FINANCIAL DECISION MAKING FOR MANAGERS:
Ratio And Financial Statement Analysis
NAME: JAMES B. TAYLOR
DATE: 04/09/2015

Table of Content
I. Executive Summary.....................................................................................3
II. Introduction..................................................................................................4
III. Financial statements tools and techniques...................................................4
IV. Exhibits…………………………………………………………………...10
V. Analysis of Results.....................................................................................11
VI. ...view middle of the document...

Finally, I will assess fund flow analysis, cash flow analysis and ratio analysis to analyze the company’s financial position over a four year period. This will be concluded by recommendations to the company, most important of which would be for the company to strategically allocate its resources in order to improve its overall efficiency

Introduction
Financial statements in an analysis are useful as they provide insights on future indicators for an organization through financial ratio analysis. Financial statements purposes at predicting future viability and profitability of a firm, while ratio analysis is significant as it anticipates future conditions where the company should operate and facilitate its decisions strategically (Houston, 2014). In this report, I will employ both qualitative and quantitative data techniques to demonstrate the company’s position in its operations. Quantitative data refers to the information that plays a significant role in analyzing the performance of business of a firm (Easton et al, 2013); while qualitative data refers to information that can be statistically manipulated to quantify and verify data. Financial ratio is a quantitative analysis of a business performance. Financial analysis involves investigating the firms invested capital, profitability of the firm, efficiency of operations and debtors security.
Financial statements tools and techniques
Vertical analysis: this technique is carried out on loss and profit account and the result is expressed in percentage to express the total amount.
Horizontal analysis: this techniques involves comparing and analyzing financial data of the firm of two or more operational years.
Ratio analysis: this techniques shows calculated result being expressed from one number to the other.
Profitability ratios: this will evaluate the total effectiveness and performance of the firm.
Profitability analysis
Hamsters Limited realized profitability growth between 2007 and 2008. However, in 2009, the firm experienced significant drop in its Net income. In 2007 the firm had 4 percent return on equity that increased in 2008 to fourteen percent but again dropped to five percent in 2010. Likewise, there was an increase on return on assets but also decreased in 2009 (Houston, 2014). Comparably, the decrease was sharper to that of Return on equity as the return on assets was 2 percent in 2009 lower than 2007 which was 3 percent. Return on equity consist two main elements: return on debt and return on operating assets. Hamster Ltd 2008 RNOA deteriorated with 16 percent decline in 2008 to 5 percent in 2009. RNOA is important because it is used to measure the overall performance of the firm. The ROD element also deteriorated with 2008 attaining 13 percent and dropped to 3 percent negatively in 2009. On the one hand, the 2008 ROCE increased with 12 percent, implying that the budget employed by the firm yielded good returns before period of expansion translating to significant...

Other assignments on Ratio And Financial Statement Analysis

Horizontal, Vertical, Ratio Checkpoint Essay

376 words - 2 pages ointThe three tools of financial statement analysis and functions are the horizontal, vertical, and ratio analysis. The horizontal ratio also called the trend ratio, evaluates financial statements and data over a certain period of time. It is mainly used in intra- company comparisons. The purpose of this is to determine the decrease or increase that took place. The vertical analysis also called the common- size analysis, evaluates the financial

Week 2 Hsm Essay

311 words - 2 pages FINANCIAL ANALYSIS RATIOS TABLE | | 2002 | 2003 | 2004 | Current Ratio | .75 | .87 | .90 | Long-Term Solvency Ratio | 1.26 | 1.38 | 2.06 | Contribution Ratio | .53 | .51 | .49 | Programs/Expense Ratio | 1.0 | 1.0 | 1.11 | General & Management/Expense Ratio | .30 | .28 | .23 | Fundraising /expense Ratio | | | | Revenue/Expense Ratio | .98 | .94 | 1.11 | Each ratio is important for all three years of the Data for XYZ

Ratio Analysis

1729 words - 7 pages Introduction Financial ratios are useful indicators of a firm's performance and financial situation. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms.Ratio analysis expresses the relationship among selected items of financial statement data. A ratio expresses the mathematical relationship between one quantity and another. Objectives of the study The study is designed to achieve the

Ratio Analysis Nestle

1052 words - 5 pages , Nestlé Company 2014) ANALYSIS OF FINANCIAL RATIOS: To begin with, it is important to consider analysis of financial statements as one of key components to “measure profitability and financial conditions of a company” (Mark 2014). There are three basic financial statements consisting of: * The balance sheet: which summarize what a firm owns and owes at a given moment of time * The income statement: which reports on how much a company earned

Econ 550

400 words - 2 pages ratios? 7. Calculate the 2013 price / earnings ratio, price / cash flow ratio, and market / book ratio. 8. Use the extended DuPont equation to provide a summary and overview of company’s financial condition as projected for 2013. What are the firm’s major strengths and weaknesses?

Puppy

353 words - 2 pages STUDY GUIDE EXAM 1: (25 multiple choice questions worth 3 points each and 3 problems worth 45 points) 3 problems may cover following topics: journal entries, adjusting journal entries, closing entries, preparation of financial statements, multiple step income statement. Chapter 1: Purpose (objective) of financial accounting; cash vs accrual accounting (net operating cash flow vs. net income); history of standard setting – SEC, AICPA

Finance

856 words - 4 pages . This is analogous to a company's cash flow statement. Using this basic information, financial analysts can perform more detailed research on the numbers. Ratio analysis, The Dupont Analysis and Trend Analysis are three examples of how financial analysts can use numbers to determine strength of performance and return on investment, (Block, 2005). When corporations are required to report their financials, they report by the Statement of

Auditing Questions

365 words - 2 pages 11 ANALYTICAL PROCEDURES—RATIO ANALYSIS FORM The auditor can use this form to document the performance and evaluation of ratio analysis in connection with analytical procedures performed in an audit. The form is only a guide and is not a substitute for professional judgment. The form may be modified by adding or omitting certain ratio analysis. CLIENT NAME: | | DATE OF FINANCIAL STATEMENTS: | | LIQUIDITY RATIOS

Finance

3708 words - 15 pages allowed.  The information about gross profit and net sales is normally available from income statement of the company. As per Task 7: The GP ratio is 23.58%. It means the company may reduce the selling price of its products by 23.58% without incurring any loss. Significance and interpretation: Gross profit is very important for any business. It should be sufficient to cover all expenses and provide for profit. There is no norm or standard

Fin534 Week 10 Assignment 1

2335 words - 10 pages expenses. Return on capital invested (Bernstein & Wild, 2000) Argues that, in analysis of financial statement return on capital invested should be calculated. It is to evaluate the return for the risk takers. Return on common equity Increased ratio means higher returns and decreased ratio means lower return for risk takers (Sinha, 2009). It is formulated as: Below table refers to the calculation for Rockwell Collins. Return on equity trend

Hr Assistent

363 words - 2 pages relationships that are significant trends. Another would be intercompany basis; comparisons with other companies provide insight into a company’s competitive position held. And last would be industry averages, comparisons with industry averages they provide what about in a company’s relative position within the industry. In a ratio analysis are for evaluating the financial health also shows the performance of a company. Ratio analysis uses

Similar Documents

Financial Ratio Analysis

6669 words - 27 pages did the index analysis of the balance sheet and income statement. We found some problems in the financial activities of the company and provided recommendations based on that. 2. Introduction Ratio analysis is a numerical attempt to analyze the performance and financial position of a business. By converting absolute numbers into ratios, we can compare between one firm and another, or between several periods of one company. Indeed, ratio

Financial Analysis Proctor And Gamble

1813 words - 8 pages FINANCIAL ANALYSIS: TEMPLATE NAME: EXECUTIVE SUMMARY: Proctor and Gamble® was founded in 1837 by William Proctor and James Gamble in Cincinnati, Ohio. Today the company is the world’s largest producer of consumer goods with over 300 brands in over 180 countries. The company has a significant advantage over its competitors because of market position and brands that everyone knows such as Tide®, Pampers®, Gillette®, Olay® and many more

Lockheed Martin Financial Statement Analysis

846 words - 4 pages Lockheed Martin, Fiscal Year 2012 Donna K Falkenburg Professor Susan Lightweis Accounting 206 – Accounting II 6/02/2013 Lockheed Martin is a publicly traded, global security and aerospace company formed in 1995. They are principally engaged in the research, design, development, manufacture, integration, and sustainment of advanced technology systems and products. They are also known to provide a broad range of management, engineering

Ratio Analysis In Decision Making For Health Care Organization

845 words - 4 pages remaining 39% is financed through equity. 2. Debt-to-equity ratio Formula: Total liabilities /stockholders’ equity = 5,399.5/stockholders equity not listed on financial statement Profitability The profitability ration in a financial analysis is the ability of the organization to generate a profit. This ratio looks at areas such as net income, revenue, gross profit, earnings before taxes and interest and operating profit to name a few. Profitability