Accounting Ratio And Financial Structure

1152 WordsOct 5, 20155 Pages
(A) In the following analysis, we choose profit margin ratio for to analyze profitability and debt to equity ratio to analyze financial structure. CCA and RGP are two companies in the beverage industry; both companies have reported an increase in profit during the 2014 financial year. The profit margin ratio can helps us to compare how efficient does the two companies use their resources. The debt to equity ratio helps us to measure the use of leverage and risks of the two companies. (B) CCA is a leading company in the beverage industry in Australia offers a wide range of products in 4 different countries. During the 2014 financial year, the company’s profit margin was increased by 2.9% due to the reduction in company’s expense. The debt to equity ratio was decreased by 22.6% due to the decreases in financial liabilities. RGP is a small to medium size company in the beverage industry offers limited products in the domestic market. During the 2014 financial year, the company’s profit margin was increased by 4.1% due to the increase in revenue and reduction in expenses. The debt to equity ratio was decreased by 16.5% due to the increase in net profit, capital shares and decrease in financial liabilities. In CCA, the intangible assets reassessment expense has decreased by 300.8 Million compare to previous year and no onerous contract signed during the year 2014 cause the expense decreased by another 50.7 million, which lead an increase in company’s profitability. For
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