Financial Ratio Analysis Of Two Companies

3173 words - 13 pages

FINANCIAL RATIO ANALYSISTable of Contents3Abstract4Introduction4Memorandum4Profitability of Sample Company5Sample Company ROI for 20005Sample Company ROI for 20015Stock Performance6Activity of Sample Company7Leverage of Sample Company7Liquidity of Sample Company7What Is Necessary to Assess the Company?8What Ratios Have the Most Value?10What Other Factors, Beyond Ratios, Need To Be Considered?10How Would Your Assessment Criteria Change If The Company In a Different Industry12Changes in Assessment Method12Conclusion13References14Appendix A - Sample Company's Financial Statements from 1999 - 200115Appendix B - Financial Ratio Analysis of Sample Company19AbstractThis research paper will evaluate Sample Company using review standard financial ratio analysis techniques and assess its potential as a good investment. This is written in the form of a memo to the CEO of an Alabama-based firm, looking for sound financial advice with regards to whether of not buying stock in Sample Company is a sound investment.IntroductionThis research paper will reveal the financial analysis techniques used to evaluate the financial performance of the Sample Company, and evaluate the company's worthiness as an investment. The paper is divided into three sections. The first section is the memo, which is the main body of the paper. The second section, Appendix A, includes as a reference contains each of the sets of the four financial statements that show Sample Company's performance from 1999 to 2001. The third section, Appendix B, contains the actual financial ratio analysis techniques, showing the company's performance in 2000 and 2001, the percent change in performance between these years, a short description of the meaning of each ratio, as well as a short assessment of the company's change in performance between 2000 and 2001. Using these appendices to support the financial analysis ideas expressed in the memo, the reader should feel that they have a complete set of facts to substantiate these ideas and provide a reference for them.MemorandumDate:July 1, 2003To:Randall K. Black, CEOAbsolutely Alabama InvestmentsFrom:William F. Slater, III, ConsultantSlater TechnologiesSubject:Financial Analysis Using Ratio Analysis and RecommendationDear Randall:Thank you for the opportunity to review Sample Company's financial statements and make this ratio analysis, as well as some recommendations about possible investment in this company.Using financial statements from 1999, 2000, and 2001, along with standard financial ratio analysis, I have been able to develop what I believe is a clear picture of this company's financial performance. Note that the financial analysis was done using the financial report data from publicly available financial statements for the years 2000 and 2001. I have included these statements for your review in Appendix AAppendix B contains other measures of Sample Company's financial performance, as expressed in standard financial ratio analysis techniques...

Find Another Essay On Financial Ratio Analysis of two companies

Financial Case Analysis - Ratio Analysis

652 words - 3 pages The financial ratios used in this problem show that Bethesda Mining has some work ahead of them. There is substantial room for improvement for some of the ratios involved. A more thorough analysis would require ratio information from the mining industry as a whole but a small snapshot is provided below.The current ratio is low. Bethesda Mining's current ratios over the two years given indicate negative net working capital. Insufficient cash to

Financial Analysis of Alternatives to Different Companies

4433 words - 18 pages for LEI and Shang-wa because those companies were at risk of being acquired by two bigger companies.Redback Networks and Ericsson"Ericsson, the Swedish telecom equipment maker that got into severe financial trouble during the telecom and dot-com bust, has made a solid comeback. However, it still has some holes in its product lineup. So the company decided to buy San Jose-based Redback Networks for $1.9 billion in a deal announced Dec. 20. The deal

General Motors - Financial Ratio Analysis

1283 words - 5 pages General Motors - Financial Ratio Analysis I. General Motors History Highlights In its early years the automobile industry consisted of hundreds of firms, each producing a few models. William Durant, who bought and reorganized a failing Buick Motors in 1904, determined that if several automobile makers would unite, it would increase the protection for the group. He formed the General Motors Company in Flint, Michigan, in 1908

ratio analysis of financial statements - UCL/finance - research paper

1157 words - 5 pages 63.048 75.278 Activity ratio Total asset turnover 0.5720 0.5677 Total fixed asset turnover 0.8284 0.8049 Financing ratio Debt to asset ratio 0.6186 0.6391 Debt to equity ratio 1.6216 1.7709 Data courtesy of NASDAQ (Historical Stock Prices, 2017) Profitability ratio analysis Based on the above profitability ratio analysis, it can be deduced that the company’s profit margin is constant throughout the two financial years. There is a constant return

ADC Tellecommunications Financial Ratio Analysis

1519 words - 6 pages ADC Tellecommunications Financial Ratio Analysis Corporate Background      ADC Telecommunications (ADCT) is a communication equipment manufacturer located in Minneapolis, Minnesota, USA. Since 1952, the company has successfully weathered the tumultuous transformation process of technology. Today, ADC Telecommunications exclusively focuses on manufacturing computer-networking equipment. Increasing demand for fiber optic transmission systems

Johnson and Johnson financial ratio analysis

1405 words - 6 pages and markets products for hospitals, diagnostic laboratories and clinics. According to the company’s own website, JNJ.com, it has more than 250 Johnson and Johnson operating companies which employs approximately 120,500 men and women in 57 countries and sell products throughout the world. Johnson and Johnson was ranked 32nd on the 2006 Fortune 500. Below is an analysis of Johnson and Johnson’s financial ratio analysis:Long Term Debt ratio is a

Financial Ratio Analysis - Harry’s Hamster Limited

2471 words - 10 pages Example Finance EssayFinancial Ratio Analysis - Harry's Hamster LimitedFinancial statements are useful as they can be used to predict future indicators for a firm using the financial ratio analysis. From an investor's perspective financial statement analysis aims at predicting the future profitability and viability of a company, while from the management's point of view the ratio analysis is important as it helps anticipate the future conditions

Financial Ratio Analysis on Philip Morris

2573 words - 10 pages filled by cigarettes are very complex.Cigarette companies measure average per cigarette yields of nicotine by following standardized machine testing methods. These machine methods were never intended to reflect what and how smokers actually inhale. The method proves that no tests can precisely duplicate conditions of actual human smoking and, within fairly wide limits, no one method can be said to be either 'right' or 'wrong'Philip Morris USA

Sky Television vs British Satellite Broadcasting: Analysis of actions of the two companies

743 words - 3 pages prices and hurt both companies' program acquisition budgets. The adoption of different DBS standards by each company further confused the audience and contributed to a slow rate of receiver sales.Although both companies resulted in huge financial losses, the player to survive would be the low cost producer with early break-even anticipations, ultimately forcing the high cost and late break-even anticipator to exit. At first glance, BSB is noted for

Ratio analysis and types of ratios

1153 words - 5 pages This has most of the average / industry trends but some companies will be different like supermarkets (high stock / Not much debt and lots of cash sales)so some ratios might be void. Thanks :)! Good LuckRatio Analysis : Content* (1) analyse financial data; evaluate the results and formulate conclusions* (2) prepare a budget and explain how it would be negotiated and monitored.* (3) produce a financial proposal and present a sound business case

Financial Statement and Ratio Analysis: Key Tools to Successful Financial Management

2633 words - 11 pages Financial Statement and Ratio Analysis: Key Tools to Successful Financial Management Executive SummaryHow do firms assess their own strengths and weaknesses? How does a firm measure management's performance? Finally, how do firms compare themselves against the competition? The answer to these questions lies in the fundamentals of financial management. A crucial element in the success of any business organization is understanding the fundamentals

Similar Essays

Compare The Financial Situations Of Two Companies

2993 words - 12 pages IntroductionThis report is to compare the financial situations of two companies in the restaurant industry, Darden Restaurants Inc. of Florida and Brinker International Inc. of Texas. The report will provide a detailed analysis and summary of several things including financial analysis, industry history and analysis, both companies history and analysis, vertical and horizontal analysis, and the creditworthiness of each company.These analysis

Financial Ratio Analysis Of Microsoft

889 words - 4 pages long-term investments as to their shareholders' pocket. Microsoft has good financial standing and controls a lot of the computer industry.2.Efficiency RatiosAsset turnover ratio and net income per employee are good measures for a company's efficiency. The former ratio shows management's ability to use assets to produce sales, while the latter indicates the employee's productivity. If either of these two ratios is low, inefficiency may be an

Financial Ratio Analysis Of Metalrax Plc

1689 words - 7 pages "profitability", shareholder would choose return on shareholders' funds to make a decision whether invest a company or not; meanwhile, a bank would consider a company's return on capital employed before lending money. With significant accounting ratios, this paper assesses the profitability, liquidity, management of working capital and the capital structure of Metalrax Group plc and finally compares performance and financial position between two

Financial Ratio Analysis

1451 words - 6 pages document will use a variety of these ratios to analyze the firm, Sample Company, as of December 31,2000. Financial Statement Ratios Profitability Ratios The ratios returns on investment (ROI) and return on equity (ROE) are two of the most popular measure of profitability of a company and, along with the P/E ratio, have the most significant value of any of the ratios. The DuPont Model expands on the ROI calculation by inserting sales and it's