At Universal Health Services, Inc.

Financial ratio analysis is a valuable tool that allows one to assess the success, potential failure or future prospects of the company (Bazley 2012). The ratios are helpful in spotting useful trends that can indicate the warning signs of

Financial statements paint a picture of financial health of an organization. Important aspects of the financial statement of a health care organization are ratios. Analysis of ratios show how two numbers relate or compare to one another. Ratios are a way for organizations to make comparison. These comparisons not only encompass what is happening presently but can also be used to make comparisons about numbers and ratios over time. Ratios are a way for organizations to compare themselves with competitors and the industry. (Finkler, Kovner, and Jones, 2007). There are four major ratios that financial statements analyze 1) liquidity 2) activity 3) leverage and 4) profitability. The financial statement for Mayo Health System

Financial statements provide users with information for evaluating an entity’s performance and financial status and thus help them to make informed decisions in their dealings with the entity. To assess these aspects, the users have various tools that they can employ. For instance, ratio analysis helps the users to detect any significant changes in an entity’s operating performance within a given period and thus indicate the risks and opportunities of the entity being reviewed (Helfert, 2001). Further, calculating ratios of companies in the same industry can help to highlight the companies that are performing below the industry average and thus help investors to choose the best company to choose from among alternatives. Apart from investors, ratio analysis can also help creditors evaluate a company’s liquidity and thus assess its ability to pay its debts on time (Helfert, 2001). Other ratios such as efficiency ratios can help managers to determine optimal uses of the entity’s assets and thus work towards enhancing efficiency. Apart from ratio analysis, horizontal analysis can also be used to reveal the trends of individual items in an entity’s income statement and balance sheet and thus help to unearth the items that may have affected the entity’s performance during a specific period. The horizontal analysis and ratio analysis of the financial statements of Starbucks Corporation that is the subject of this paper indicate that

Profit Margin: -This ratio relates the operating profit to the sales value (Walker, 2009). It tells us the amount of net profit per pound of turnover a business has earned.

The success of a business depends on its ability to remain profitable over the long term, while being able to pay all its financial obligations and earning above average returns for its shareholders. This is made possible if the business is able to maximize on available opportunities and very efficiently and effectively use the resources it has to create maximum value for all involved stakeholders. One way the performance of a company can be measured on critical areas such as profitability, its ability to stay solvent, the amount of debt exposure and the effectiveness in resource utilization, is performing financial analysis where a set of ratios provides a snapshot of company performance and future

It is easy to forget that pouring money into a problem will not fix it unless revenue flows continue or are increased and expenses are controlled. Some of the easiest computations can be made with information retrieved from balance sheets and income statements provided by accountants. Ratios such as the current ratio, long-term solvency ratio, contribution ratio, programs and expense ratio, general and management expense ratio, fund-raising and expense ratio, and revenue and expense ratio can provide a picture of where a company stands now compared to where it was in past years and what may need to be done in the future.

There is a essential use and limitations of financial ratio analysis, One must keep in mind the following issues when using financial ratios: One of the most important reasons for using financial ratio analysis is comparability and for this, a reference point is required. Usually, financial ratios are compared to historical ratios of the business itself, competitor’s financial ratios or the overall ratios of the industry in question. Performance may be adjudged as against organizational goals or forecasts. A number of ratios must be analyzed together to get a true and reliable picture of the financial performance of the business. Relying on each ratio

UnitedHealth Group is a 21st Century Company.  Their value is consistent in name and heritage. Honesty is the foundation of their organization.  The company strives for transparency in reporting and regulatory relationships.  They deliver solutions that improve the health and well-being of individuals.  UnitedHealth Group strives to communicate their objectives and goals clearly and create ways to measure their progress towards these set goals.  Utilizing scientific business methods to drive and sustain improvements and lower costs is what the company uses to meet and exceed the expectations of customers, shareholders and surrounding community.

As noted in this week’s discussion, a pervasive weakness of financial ratios is that they do not permit managers and others to assess the long-run sustainability of a business’ operations within a society. Therefore additional analysis is needed. Ratios can help a manager in comparing the competition. “These comparisons may facilitate “benchmarking” analysis and prompt managers’ investigation and other follow-up action.” (Regis University, Financial Ratio Analysis n d, p12)

Operating margin is a measure of what percentage of the organizations revenue is remaining after meeting the financial obligations / costs of production of the services. These costs include wages, raw materials, etc. It is important to have a healthy operating margin so that the organization has enough money to pay for its fixed costs. According to Becker’s Hospital review derived from a benchmarking 150 hospitals, the average operating margin for these hospitals is 2.6%. Virginia Hospital Center’s operating margin totaled to 1%. This indicates that the hospital is doing less than other hospitals, but we are still making progress. This also indicates that we have a large opportunity for improvement. The operating margin also indicates that we are making more than hospitals that are

“The operating margin is a margin ratio used to measure a company’s pricing strategy and operating efficiency” (Cleverly and Song, 2011). In order to find the margin, the student had to divide the operating income ($197,605) by the net income ($258,125) and got the operating margin of 76.55% for this year. For the following year, the student also divided the operating income ($204,303) by the net income ($263,469) and got the operating margin of 77.54% for the previous year.

Financial ratios are great indicators to find a firm’s performance and financial situation. Most of the ratios are able to be calculated through the use of financial statements provided by the firm itself. They show the relationship between two or more financial variables that can be used to analyze trends and to compare the firm’s financials with other companies to further come up with market values or discount rates, etc.

There are many financial ratios used in evaluation of a healthcare organization’s performance but for purpose of this study, it will be limited to activity, leverage investment, liquidity and profitability.

The aim of this paper is to analyse the financial position of Melbourne IT limited through the use of financial ratios, based on the annual report for the periods December 2012 and 2013. Financial ratios are useful since they measure a company’s performance and give an overview of the financial situation. Ratios are also used to analyse trends and to compare a firms financial figures to other competitors within the same industry.

The financial ratio analysis of a company is a useful indicator to measure the success of a company. By comparing financial ratios between companies in the same industry (competitors) it is a useful way for investors and shareholders to determine the financial health and/or the sustainability of a company. Disney’s main competitors within the industry include Time Warner and 21st Century Fox. There are five key areas of comparison that provide excellent financial analysis of a company. They are short-term solvency, long-term solvency, asset management, profitability, and market value.