For any organization to properly understand the current health of that organization one of the best ways to gain this understanding is by completing a ratio analysis of the company. This level of understanding helps providing a solid understanding of the financial health of the organization and the long-term trajectory of the organization as a whole. This remains true with Genesis Energy, which as a newly established operations management team may need all of the assistance that the organization can get. Additionally, it is important to understand how an organization preforms compared to the completion. According to the Wall Street Journal (2014):
“Available Cash before Reserves, also referred to as distributable cash flow, is commonly
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“Each of these analysis techniques offers very specific uses but in general allows analysts to evaluate company performance over time, taking into account relative size, across industries” (Argosy University, 2014, para. 1). Being able to have a better understanding of the organization’s performance over a certain period of time is extremely beneficial. Primary way of doing this is calculating financial ratios in order to understand the overall health of the company. “Financial ratios are derived from the balance sheets and income statements and are generally divided into five major categories: profitability, liquidity, debt, asset activity, and market size. Each serves as an independent calculation, but jointly, they present a financial picture of the organization” (Argosy University, 2014, para. 1). Completing a trend analysis will give a better picture of the organizations health over the last three years and will give the organization the understanding needed to make any necessary changes. The trend analysis for the Genesis Energy company spans a three year timespan from 2011 to 2013. As part of this analysis it reviewed the following areas: Liquidity, Inventory Turnover, Debt Ratio, Basic Earnings Power, and Price per Cash Flow. To start off it is important to understand that the liquidity of a company is the company’s ability to convert their assets to cash. Over the last
In order to ascertain how well a company is performing, analyses must be done in regard to the business being stable, including its’ ability to pay debts, how much cash or other liquid assets are available, and whether the organization is viable enough to continue operations. These analyses typically look at income statements, balance sheets, and statements of cash flow, where current and past performance will be studied with the goal of predicting how the company will perform in the future.
Industry averages and financial ratio reports determine the financial health of an organization. Solvent, efficiency, and profitability are compared by key financial indicators and ratios that measure several companies within the same industry. The publicly traded company chosen by Team A is ExxonMobil. “The largest publicly traded international oil and gas company in the world. ExxonMobil makes products that drive modern transportation, power cities, lubricate industry, and provide petrochemical building blocks that lead to
• Present 5 years of statements – Ratio – Trend Analysis – See if ratios are improving
When determining which company has the most to offer it is necessary to look at each set of numbers from several different views. For instance this paper will cover vertical and horizontal analysis, profitability, solvency, and liquidity ratios. I will be explaining how each set of results play into the decision making of which company would be best to invest in, by comparing both companies numbers in able to collect the necessary data to make a calculated decision.
The analysis of a company's financial statements helps in the determination of both the weaknesses and strengths of the concerned entity. Further, such an analysis helps in the determination of the future viability of firms. There are a wide range of techniques utilized in the analysis of financial statements. In that regard, it is important to note that the relevance of a horizontal, vertical as well as ratio analysis of a company's financial statements cannot be overstated. This is more so the case when it comes to the interpretation of the various dollar amounts presented in both the balance sheet and the income statement. In this text, I carry out a horizontal, vertical as well as ratio analysis of both The Coca-Cola Company and PepsiCo, Inc. The analysis' results will be critical in the evaluation of each company's performance. Findings will be used as a basis for recommendations on how each company can improve its financial status.
Discuss the trend for each ratio and what it tells you about the organization’s financial health.
After coming up with all of the financial ratios the financial statements are able to provide, management can figure out the trend analysis,
Ratio analysis: Perform trend and ratio analysis on current and fixed assets, current and long term liabilities, owner’s equity, sales revenues, EBIT, net income, and earnings per share. Project these trends
There are many ways to analyze the performance of a company, some more popular than others. According to the Barney text the accounting method is the most popular way of measuring a firm's performance (Barney, 2002). Some of the reasons for the popularity could include the fact that accounting measures of performance are publicly available on many firms and they communicate a great deal of information about a firm's operations. Other methods of performance analysis include firm survival and the multiple stakeholder approach.
All managers need to understand where value comes from in their firm. The purpose of this analysis is to identify the financial strategy and performance of this particular publicly traded company. The process of understanding the risk and profitability of a company by analyzing reported financial info, especially annual and quarterly reports are vital to identifying the company’s overall financial performance. I wanted to analyze Coca Cola because the company has so much history and is one of the most recognizable brands in the world. I have always enjoyed researching food and beverage companies
Before 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, Sample Company, as of December 31,2000.
Many companies emphasize a culture of continuous improvement. While never being satisfied with the status quo can drive
Ratio analysis is generally used by the company to provide some information on how the company has performed during that year, so that the parties involved including shareholders, lenders, investors, government and other users could make some analysis before making any further decision towards that particular company. As mentioned by Gibson (1982a cited in British Accounting Review, 2002 pg. 290) where he believes that the use of ratio analysis is such an effective tool to evaluate the company’s finance, and to predict its future financial state. Ratios are simply divided in several categories; these are the profitability, liquidity, efficiency and gearing.
This section will critically evaluate the financial performance of Genesis and will be an explanation of the available financial data on the business.
2. Examination of financial statements and matching the findings from analysis with events and movements within the industry; and