Financial Ratios and Profit Analysis Methods
One ratio that is easy to fixate on is the PEG ratio, or profit earnings/growth ratio. Per Yahoo Finance, that metric currently sits at 1.51 for the next five years expected and anything between 1 and 2 is generally considered to be decent to good depending on the industry.
The rationale behind this ratio being chosen is that a firm must be growing and expanding to be viable longterm. Just showing a profit is not good enough because a firm can be retracting yet showing a profit at the same time. For example, if a retail outlet is closing stores, that does not mean they would post a loss but it's far from good if the number of open stores is going down because that would almost certainly mean that revenue is also going down unless the firm is expanding greatly its online offerings. One of the few examples where such a shift would be expected and normal given the current economic climate would be firms like BlockBuster who are clearly shifting from brick and mortar stores to online stores and/or digital offerings in general. HYPERLINK "http://finance.yahoo.com/q/ks?s=HMA+Key+Statistics" http://finance.yahoo.com/q/ks?s=HMA+Key+Statistics HYPERLINK "http://www.investopedia.com/ask/answers/06/pegratioearningsgrowthrate.asp" http://www.investopedia.com/ask/answers/06/pegratioearningsgrowthrate.asp 2.Speculate on…

Financial Ratio Analysis in a Company
859 Words  3 Pagesto Olowe (1997), Financial Ratio Analysis is the relationship between the performance of a company and the monetary data in the financial statements to assist the economic conditions. Financial ratio was defined by Robert (1994) as two financial variables being used that have been taken from either the income statement or from the balance sheet. Ratio analysis is a tool that is brought in by individuals to perform an evaluative analysis of information in the company’s financial statements. It is…

Financial Ratio Analysis Report
1667 Words  7 PagesFINANCIAL RATIO ANALYSIS REPORT The fiscal year 2004 was a relatively soft year for Barnes & Noble, Incorporated (B&N). Blockbuster nonfiction books that came out during the year may not have come from the company, but business remained strong. This is due to the million of books already in the market, including phenomenal fiction hits "The Da Vinci Code," "The Five People You Meet in Heaven," and "The Rule of Four," and thousands of new releases during the year. This claim was supported by the…

Financial Ratio Analysis
3810 Words  16 PagesHome FINANCIAL RATIO ANALYSIS Financial Ratio Analysis William F. Slater, III ACC 529 Accounting for Managerial Decision Making University of Phoenix Week 5 Assignment for ePortfolio Michael Greenen, C.P.A, C.F.P.  Instructor July 1, 2003 Table of Contents Table of Contents 3 Abstract 4 Introduction 4 Memorandum 4 Profitability of Sample Company 5 Sample Company ROI for 2000 5 Sample Company ROI for 2001 5 Stock Performance 6…

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1157 Words  5 PagesSession 15: Limitation of Ratio Analysis Learning Objective Explain to the participants on the limitation of ratio analysis. Important Termss Creative accounting. Accounting Policies. Limitations of Ratios Accounting Information Different Accounting Policies The choices of accounting policies may distort inter company comparisons. Example IAS 16 allows valuation of assets to be based on either revalued amount or at depreciated historical cost. The business may opt not to revalue…

Financial Analysis and Ratio Analysis
1713 Words  7 PagesSection III: Financial Analysis—Ratio Analysis Profitability Ratios When evaluating the company’s profitability, we pay attention to the following ratios which are commonly analyzed: Net Profit Margin, Accounts Receivables Turnover, Return on Assets and Return on Equity. From the tables and figures, all the ratios have increased over the past five years except for 2012. This means UPS is overall a healthy company and does a good job at generating profits. Net Profit Margin Ratio It measures…

Financial Ratio Analysis
11306 Words  46 Pages FINANCIAL RATIO ANALYSIS PROCTER & GAMBLE  PFIZER INC JANIE PRINCE FINANCE 405  FALL 2012  Company Backgrounds Procter & Gamble William Procter and James Gamble, immigrants from England and Ireland respectively, met when they married into the Norris family. Their fatherinlaw suggested they build their own company since both men had useful trades Procter was a candle…

Essay on Financial Ratios and Net Profit Margin
1177 Words  5 PagesFinancial Statement Analysis Exercises (Chapter 2) 24. Consider the following potential events that might have taken place atVodafone Group Plc on 31 March, 2012. For each one, indicate which line items in Vodafone’s balance sheet would be affected and by how much. Also indicate the change to Vodafone’s book value of equity. (In all cases, ignore any tax consequences for simplicity.) a. b. A warehouse fire destroyed £50 million worth of uninsured inventory. c. Vodafone used £50million…

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1420 Words  6 PagesBefore beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This document will use a variety of these ratios to analyze the firm…

Ratio Analysis Financial Accounting
3622 Words  15 PagesFinancial Accounting and Reporting – Ratio Analysis The following fiveyear summary relates to VKM Ltd, and is based on financial statements prepared under the historical cost convention. Financial Ratios 2006 2005 2004 2003 2002 Profitability Margin Trading Profit Revenue % 7.8 7.5 7.0 7.2 7.3 Return on Assets Trading Profit Net Operating Assets % 16.3 17.6 16.2 18.2 18.3 Interest & Dividend Cover Interest cover Trading Profit Net Finance Charges times 2.9 4.8 5.1 6.5 3.6 Dividend…

Financial Ratios and Gross Profit Essay
5460 Words  22 Pages1. What is the purpose of financial statement analysis? It show trends and relationships. These also help predict the future, show weaknesses, strengths. The ratios usually are compared to other companies within the industry and industry average to see where the company stands. Source: http://answers.yahoo.com/question/index?qid=20080215185426AACTP6A 2. If a company had sales of $2,587,643 in 1998 and sales of $3,213,456 in 2003, by what percentage did sales change during this time period…
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