Interpenetrating Financial Results Hospira Essay

830 Words Aug 18th, 2014 4 Pages
Interpreting Financial Results: Hospira Investor Relations
Jose De Jesus Farelas
Atwal Gurpreet

Financial ratio analysis is an important tool to use when understanding your organization’s health. Some of the most-important ratios to use would be short-term liquidity ratios and the profitability ratios. In this paper, I will go over the current ratio, gross profit margin, net profit margin, return on assets, and return on equity. I will then explain how these ratios effect my chosen organization which is Hospira Investor Relations, and explain how they compare to the historical data as well as the companies benchmarks. Current ratio measures how well the firm can pay off it’s obligations. The past three years of Hospira
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This is a good indicator for investors to understand the value of the company. If the organization can handle their assets well, then this organization might be worth to invest. For Hospira in 2013 the ROA was .1%, in 2012 the ROA was .7%, and in 2013, the ROA was .2%. In this data, you can see that Hospira is not doing so well, and may even be in debt. The last form of profitability ratios is the return on equity. This profit ratio is similar to return on assets with the difference is that the firm focuses on the profit the company generates with the shareholder's investments. This is a much more important indicator for investor's to see how their money is being used within the firm. The lower the amount, the worse it is. In 2013 Hospira's ROE was .2%, in 2012 the ROE was 1.4%, and .3% for the 2011 year. Hospira has not been doing well as the ROE is not stable and has been dropping each year. In conclusion, based off the financial information provider, it is clear to tell that Hospira has not been doing well in generating enough sales for the organization since 2011. This company may be in debt, and it is not wise for investor's to invest into the firm. The current ratio has been at its lowest in 2013 which shows that the company has not been doing well paying off its debts. The gross profit margin, net profit margin, ROA, and ROE all show lower or unstable from 2011 to 2013. In the end this organization does not seem that it had met its

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