Finance 382 Complete Course Project

Total asset turnover : This ratio measures the efficiency of a company’s use of its assets

Financial leverage is the ability of the company to maneuver with financing options to meet the obligations (Investopedia, 2012). There are two leverage ratios that were analyzed for this financial statement 1) debt ratio and 2) debt-to-equity ratio.

The debt ratio explains the amount of debt maintained by both respective companies, and represents the amount of debt used by the company to finance business operations and is

In this report, we are going to analyse the financial performance of JB Hi-Fi Limited (JBH), over the past three years (2012 to 2014), by calculating a series of ratios, using different historical data provided by audited financial reports. A period of three years has been selected for the financial analysis of the company as trend results generated over several periods are much more meaningful than that from a single year balance sheet and income statements. Moreover, after having calculated the ratios, we will then draw conclusions on the past performance of the company and finally benchmark with of one its main competitors, Harvey Norman.

When comparing the debt-to-assets ratio of McDonalds and Wendys, you have to divide the firms total liabilities by their total assets. Essentially, the debt-to-assets ratio is the primary indicator of the firms debt management. As the ratio increases or decreases, it indicates the firms changing reliance on borrowed resources. The lower the ratio the more efficient the firm will be able to

How frequently do you cycle through your inventory? If you’re a high quantity distribution corporation with lots of product coming in and going out, you would expect a greater turnover ratio. For example, if you’re distributing soda, you may measure turnover ratios by month, and expect to cycle via all your stock more than one times. Inventory turnover ratios are specially essential for companies that stock perishable

Inventory turnover in days is an assistant figure of inventory turnover. The shorter of the days, the faster of the inventory turning to cash, and the better use of short-term capital. This figure of the firm was very high in 2001 and began to fell down from 2002,then lower than industry in 2004 and 2005.This indicates the management of the firm became better.

The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. Star River’s last year (2001) standing D/E ratio was 2.2 which is higher than its industry practice. A high debt/equity ratio generally means that the company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense.

A third activity ratio is the inventory turnover ratio, which indicates the effectiveness with which the company is employing inventory. Since inventory is recorded on the balance sheet at cost (not at its sales value), it is advisable to use cost of goods sold as the measure of activity. The inventory turnover figure is calculated by dividing cost of goods sold by inventory:

Another ratio we will look at is total asset turnover rate. Total asset turnover rate measures how efficiently a company uses its assets to generate sales. In 2001 the total asset turnover rate was 1.079 and in 2000 it was 1.193. The fixed asset turnover ratio is similar to the total asset turnover ratio but includes only fixed assets. The fixed asset turnover rate measures the capacity utilization and the quality of fixed assets and was 3.771 for 2001 and 3.854 for 2000.

Long term creditors and shareholders are interested in this part of ratios and very carefully to deal with it. It evaluates how the company is using or managing its debt. Debt asset ratio and times interest earned and times interest earned will be calculated in

The calculation of ratios is the calculation technique for analyzing a company’s financial performance that divides or standardize one accounting measure by another economically relevant measure. Financial ratios can be used as a tool to demonstrate financial statement users for making valid comparisons of firm operating performance, over time for the same firm and between comparable companies. External investors are mostly interested in gaining insights about a firm’s profitability, asset management, liquidity, and solvency.

You can make use of three different ratios to evaluate company and measure its financial strength. Two of the ratios viz. debt and debt-equity ratios are very common measurements. The third one, capitalization ratio, gives a proper insight in evaluating the company’s capital structure.

The debt to equity ratio is a financial, liquidity ratio which compares total debt to total equity of an entity. It illustrates the percentage of entity financing that comes from creditors and investors.

In this ratio he explains about the three types of business inventory like raw materials, work in progress and finished goods. Formula to find the inventory turnover ratio and average age of inventory is: - inventory turnover = costs of goods sold/average inventory, Average age of inventory = 360 days/inventory turnover ratio.