Financial ratios

productively than Tesco to generate sales revenue. This is also reflected in Morrison’s lower trade payables rate and inventory turnover period. Morrison’s value is not too high to suggest overtrading on their assets (Atrill and McLaney, 2011). This ratio helps ordinary shareholders and banks monitor the efficiency in the use of their funds. Overall, it can be shown that Tesco generates more profit than Morrison by their higher OPM rates. However, Morrison generates more of their profit…

transaction of financial instruments such as equity securities also known as stocks and bonds. Stocks are the most common form of investment for many people. Individuals interested in saving or generating some returns buys shares of a given company and sells when the price rises. A stock is a share of ownership or a claim on a firm’s assets and earnings. However, the stockholder does not own the company or the assets but the shares sold. In this case, the shareholder benefits from a company’s…

The three main liquidity ratios are the current ratio, the quick ratio and the cash ratio. The current ratio is defined as the current assets divided by the current liabilities. This was 1.04% in 2016, which is essentially unchanged in 2017. The quick ratio is the current assets less the inventories, divided by the current liabilities. For Amazon, this is .74%. Both of these figures are healthy, as is the cash ratio of .59%. Net Working Capital (NWC) is also a measure…

Ratios are important for measuring for comparing one hospital to another and financial statements are necessary to compare from another. Accountants, management, and health care administrators are to refer to ratios as a guide to develop a broader convey of the financial standing of the organization. Liquidity ratios have a big part of accounting and health care organizations, and the purpose of them to assess how well the organization is doing in terms of assets. Then, solvency, efficiency, and…

RATIO ANALYSIS Financial ratios help external stakeholders, and enterprise managers know how well or poorly a business is performing and pinpoint areas that could do with improvement. Companies can also compare themselves to the competition or to diverse companies in other industries. Size need not be an issue since ratios standardize accounting relationships to provide management with a raw reckoning of financial status and trends. To better categorize them, financial ratios are generally…

Industry Averages and Financial Ratios Home Depot is one of the world’s largest specialty retailer stores for home improvement and a one stop shop for people who is considered as do-it-yourselfers. Home Depot offers customers a wide variety of home improvement ideas and support with their customer service. Home Depot has become the leading home improvement store that provides online service, retail, delivery, and do-it-yourself training. The comparison between Home Depot and other similar…

FINANCIAL RATIO ANALYSIS Operating Profitability Ratios Gross Profit Margin Gross profit margin is used to compare a company with its competitors. A higher gross profit margin indicates that a company can make a good profit provided it keeps its overhead costs under control whereas a lower gross profit margin indicates that the company is unable to control its production costs. Ideal gross profit margin depends on the industry. From the above graph, the gross profit margin has shown a…

Ratios related to financial decision process The table 2 below indicates three types of investment ratios and their implications. Fixed assets turnover is sometimes highly emphasized while making investment decision as it measures the relationship between fixed assets invested and profits generated, which may interest those investors and shareholders who have invested its property or fixed assets into the business and also it could be also significant to the financial manager as he may make an…

Financial Results over Three Year Period The company’s financial result is the difference between earnings before interest and taxes, and it determines by the earnings or the loss that results from financial affairs. PepsiCo has higher gross profit from 2011 to 2013; however, Coca-Cola has higher operating profit and net income from 2011 to 2013. Coca-Cola 2013 2012 2011 PepsiCo 2013 2012 2011 Gross profit 28,433 28,964 28,327 Gross profit 35,172 34,201 34,911 Operating profit 10,228 10,779…

Table of Contents Ratio Analysis 2 A) Definition and explanation of different financial term: 2 B) Calculation of financial ratios: 3 C) Ratio analysis: 3 References 5 Ratio Analysis A) Definition and explanation of different financial term: i. Current Assets are the items on balance sheet of an entity which are in the form of either cash, equal to cash or can be converted to cash within next one year. For example: investments, foreign currency, cash, inventory, receivables and work in…