Ratio Analysis Essay

“In spite of its limitations ratio analysis is widely used as a means of evaluating the past performance and predicting the future successes or failures of business organisations.” Ratio analysis isn 't just picking different numbers from the balance sheet, income statement, and cash flow statement and comparing them. Ratios compare facts against previous years, the industry, other companies, or even the economy in general. Ratios look at the relationships between values and relate them to find

Financial Analysis Report This report analyses the financial performance of BHP Billiton, a diversified natural resources group, for a potential investor. It uses the financial ratios to analyse the company’s profitability, liquidity, efficiency and investment potential. Qasim 1 Introduction 1 2 Peer companies Selected 1 2.1 Vedanta Resources PLC 1 2.2 Vale Limited 1 3 Financial Analysis of BHP Billiton 2 4 Financial Analysis of Peer Companies 3 5 Interpretation of Analysis 4 5

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) One business where ratios are used for benchmarking is Major

According to 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

to invest their money. The economic environment indicators assist these investors in determining the state of the economy. In this paper, I will describe the methods used to assess the macroeconomic environment, discuss the value of financial ratio analysis in the context of common stock investing and compare intrinsic value and market price. Macroeconomic environment Unlike their counterparts during the great depression, financial policymakers today have enormous statistics at

Ratio analysis is used to describe the important relationship that lies between figures based on line items in financial statements like the balance sheet, profit and loss account, and a budgetary control organization. Ratio analysis is a technique of analysis and interpretation of financial statements. It helps in evaluating the financial position and performance of the firm, ratio analysis also allows firms to compare their operational or financial performance to another firm or the industry standard

Every company or business using ratio analysis to measures financial performance within a period of time to shows their profit or loss. There is no doubt that ratio analysis gives great insights about a company. Using ratio analysis by a company also has few disadvantages. First of the disadvantage of using ratio analysis is difference in accounting methodologies. Certain ratios may be adversely affected by a company’s accounting practices. Different company may be using different accounting method

Performance of Ted Baker PLC – 2010 to 2013 The following document analyses the financial performance and position of Ted Baker Plc over the last four fiscal years (2010 to 2013) using ratio analysis. The Appendix provided shows the balance sheet, income statement and calculated and graphical representation of the ratio analysis. Overview of 2010-2013 Results: Profitability: The company has shown good profitability over the years and has been a top performer in its peer group. 2012 saw a shift in revenue

FINANCIAL RATIO ANALYSIS Table of Contents3 Abstract4 Introduction4 Memorandum4 Profitability of Sample Company5 Sample Company ROI for 20005 Sample Company ROI for 20015 Stock Performance6 Activity of Sample Company7 Leverage of Sample Company7 Liquidity of Sample Company7 What Is Necessary to Assess the Company?8 What Ratios Have the Most Value?10 What Other Factors, Beyond Ratios, Need To Be Considered?10 How Would Your Assessment Criteria Change If The Company In a Different Industry12

Cash ratio of Johnson and Johnson is calculated as:2006200520040.2131412771.2772457460.9251095This calculation again shows that in 2004 and 2005 Johnson and Johnson has enough liquid assets to cover liabilities however, in 2006 Johnson and Johnson's ratio dropped to 0.2 showing a decrease in liquid assets. Asset Turnover Ratio calculates the total sales for every dollar of assets a company owns. Asset Turnover ratio of Johnson and Johnson is calculated as:2006200520040