...Rashmi Deshpande 008158722 Rashmi Deshpande 008158722 Financial Performance measures in a traditional business system Measuring the financial ability is a very important approach for any business entity in order to enhance its overall performance, profits and to maintain a financial stability. Financial performance measures are done in order to depict the company’s overall performance. This is done by performing some simple mathematical calculations. The most common way of measuring one’s financial measures is by calculating the financial ratios. These financial ratios can be used to compare the financial abilities of different companies. Thus these ratios are kind of scores based on which the companies are rated. These ratios can also help the company management in creating business plans and creating presentations for their customers and investors. Some of the common financial ratios used as financial measures are: The liquidity Ratios: These ratios are used to find out “how much ready cash or near cash a company has?” Some of the liquidity ratios are 1) Current ratio 2) Quick ratio The Profitability Ratios: These ratios measure the return on investment or the profitability. The most common profitability ratios are 1) Profit ratio 2) Earning power 3) Return on investment of Assets 4) Return on common equity. Asset Ratios: These ratios are used to measure the asset management ability. Some of the common asset ratios are 1) Inventory turnover 2) Days of receivable...
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...Financing New Ventures In Chapter 5, we learned about evaluating financial performance. We can evaluate performance by looking at financial ratios and conducting different forms of analyses. Some useful analyses are trend analysis, cross-sectional analysis, and industry comparables analysis. Trend analysis is used to examine a venture’s performance over time. Cross-sectional analysis is used to compare a venture’s performance compared to another company at the same point in time. Industry comparables analysis is used to compare a venture’s performance against the average company’s performance in the same industry. Next, we looked at MPC income statements and balance sheets. A major part of MPC is cash burn. Cash burn is the cash a venture expends on its operating and financing expenses, as well as its investments in assets. Another important part of MPC is cash build, which is equal to the (net sales – change in receivables). In order to find the net cash burn, you must subtract the cash build from the cash burn. Liquidity ratios, which indicate the ability to pay short-term liabilities when they come due, is also an important aspect. Another evaluation tool is the conversion period ratio. This ratio indicates the average time it takes in days to convert current assets and current liability accounts into cash. The operating cycle and the cash conversion cycle also play a part in the evaluation. There are also different types of conversion periods. They...
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...American International University-Bangladesh (AIUB) INTERNSHIP RESEARCH REPORT ON “Financial Performance Analysis of GrameenPhone Ltd.” An Internship Report Presented to the Faculty of Business Administration in Partial Fulfillment of the Requirements for the Degree of Bachelor of Business Administration Supervised By: Farah Rezwan Faculty, School of Business Administration Department of Finance Submitted By: Shafi,Hasibuzzaman Student, School of Business Administration ID: 08-11124-2 Mejor-Accounting & Finance Date of Submission: April 19, 2012 INTERNSHIP RESEARCH REPORT ON “Financial Performance Analysis of GrameenPhone Ltd.” LETTER OF TRANSMITTAL 08 May, 2012 Mr. R. Tareque Moudud Director, Office of Placement & Alumni (OPA), American International University-Bangladesh Banani, Dhaka. Subject: Internship Research Report on “Financial Performance Analysis of GrameenPhone Ltd”. Dear Sir, I have completed the Internship report on “Financial Performance Analysis of Grameenphone Ltd.” With due respect, I am submitting my internship research report on the above mentioned title for the partial fulfillment of the requirements for the Degree of Bachelor of Business Administration. I took this report as an opportunity to reflect my learning of the techniques and skills of this three months long internship...
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...Task 1: (a) Outline the roles that budgets traditionally play in organizations. Every organization needs a budget and cannot progress or meet its financial goals without budgeting. Budgeting is the most important activity in a business, it gives direction and helps reach the targets easily. Budget is a plan – quantified in monetary terms – which covers income, expenditure and capital investment and prepared prior to a defined period of time. It is always for the future. The time for which prepared is certain (6 months / 1 year / 3 years). Prepared in quantitative details. Reflects well-defined objectives and roles in organizations. The roles that budgets traditionally play in organizations are as follows: 1. To ensure the achievement of the organization’s objectives. Targets may be set for individual departments and organization as a whole to be achieved within the timescale of the budget plan. 2. To compel planning and decision-making. Planning makes management to look in future, to make decisions, to prepare detailed plans for attaining the targets, to foresee problems and give the organization direction. 3. To communicate ideas and plans. Each person affected by the plans should be aware of what he or she is supposed to be doing. Hence one-way or two-way communication is necessary in each level of organization. 4. To co-ordinate activities. It is important to co-coordinate all the activities of different departments of organization in order to ensure maximum...
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...Financial Performance Evolution on “Square Pharmaceuticals Ltd” At first we want to express our great gratitude to our honorable Teacher to give us such a good topic for making a assignment. He gave us his helpful hand to do this assignment. His class lecture & advice help us to prepare our assignment very much which was very fruitful to us. So we are grateful to him. At the very beginning, a special note of acknowledgement is due to our course teacher, Mr. X, for giving us the permission to prepare the report on this topic. He was very generous and friendly toward us while conducting the course and was the person who has guided us throughout preparing the report. His teaching method was really effective and interesting. We would like to thank all mighty Allah for keeping everything on right track. Finally, we would like to thank our parents and friends without whose support it was impossible for us to complete the project. Executive Summary As escalating pharmaceutical expenditures draw increased scrutiny from policy makers, the media, and consumer advocacy groups, the debate over pharmaceutical price controls is emerging as a key political issue. Notably absent is the consideration and investigation of the impact of market-based pricing patterns in the Bangladesh on bio-pharmaceutical innovation and related economic contributions. The report is designed to bridge the gulf between the theoretical knowledge & real life. It is designed to have a practical experience...
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...Executive Summary David Jones is an iconic Australian retailer, opened in Sydney 1838. This report considers the 2013 Annual Report and the financial performance for 2012 and 2013. The company operates in the retail trade sector with operations focussing on Department Stores (representing approximately 65% of earnings) and the associated Financial Services (representing approximately 35% of earnings). The department store sector is slowly declining as consumers move a larger portion of their household spending into online sales. Additionally, the incumbent stores (David Jones and Myer particularly) are being challenged by the arrival of well financed international competitors to the Australian market. The company has taken some strong leaps to maintain market share including building an Omni Channel capability, improvement in inventory management, reduction of its already low debt and working with suppliers to harmonising pricing. The report considers the financial performance of the company through the evaluation of financial ratios for profitability, efficiency, productivity, solvency and market performance. Overall the company currently is a profitable business with low gearing, high (but declining) sales and productive workforce. The Return on Equity improved from 37.5% in 2012 to 37.8% in 2013, positively confirming that many of the changes implemented by management during this period have been successful. During this same period revenues declined from $1.867bn...
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...Chapter 1 Introduction 1.0 Introduction Financial analysis and performance evaluation of a company are vital facts for any company in today’s world. It includes different aspects of the company. This analysis assesses the viability, stability and profitability of the company. At some level every business decision involves financial analysis and valuation. Outside the firm, security analysts conduct financial analysis and valuation to support their buy/sell decision. This is necessary to price an initial public offering and to inform parties to sale, estate settlements, and divisions of property involving ongoing business concerns. Even credit analysts, who typically do not explicitly estimate firm value, must at least implicitly consider the value of the firm’s equity “cushion” if they are to maintain a complete view of the risk associated with lending activity. One of the aims of this study involves the use of analysis and valuation in order to know about the company’s current financial situation. Another aim of this report is to point out whether the share price of the company is overpriced/underpriced/accurately priced. ACI Limited was established as the subsidiary of Imperial Chemical Industries (ICI) in the then East Pakistan in 1968. After independence, the company was incorporated in Bangladesh in 1973 as ICI Bangladesh Manufacturers limited as a Public Limited Company. In 1992, the company was divested to local management and the name of the company changed to Advanced...
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...CONTENTS Page No 1. Introduction 2 2. Company Background 3 3. Asset Management and Leverage 5 4. Classification of Ratios 6 5. Ratio Analysis of the Performance of Air Asia and Malaysian Airlines System for the year 2011 7 6. Conclusion 11 Bibliography/Reference 13 QUESTION: Select any two listed companies of Bursa Malaysia from the Trading/Services sector and evaluate the companies’ asset management and leverage ratios using their financial statements for the year 2011 ANSWER 1. INTRODUCTION Malaysian Airlines System (MAS) and Air Asia are currently the two main airlines operating in Malaysia. These two companies are competing in the airline industry which is fiercely competitive. This is a very large and continuously growing industry giving the industry players the opportunity for immense financial gains. The different categories in the airline industry usually comprise of: International Category which has airplanes with adequate seating capacity that makes it possible for passengers to travel to any destination in the world. The earnings in this category gross over a billion dollars. National Category which has a lesser seating capacity and the gross revenues are less than one billion dollars. Regional Category with planes that operate short-haul flights. Cargo Category which has planes transporting goods. The airline industry is characterized by its large...
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...Financial Performance Analysis of MAS | | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | Asset management | Receivables turnover | 7.44 times | 8.12 times | 7.12 times | 4.84 times | 5.16 times | 4.41 times | Days sales in receivables | 49 days | 45 days | 51 days | 75 days | 71 days | 83 days | Proftability ratio | Profit margin | 1.63% | 0.58% | -1.03% | -14.25% | 5.39% | 3.88% | Return on assets | 2.44% | 8.48% | -1.90% | -19.98% | 6.97% | 5.89% | Liquidity ratio | Current ratio | 1.38 | 1.42 | 0.74 | 0.81 | 1.18 | 1.04 | Asset management – Receivables turnover ratio measures how efficiently a firm uses its assets.it can be noted that this ratio has increased significantly from year 2003 to 2008 by 69%. This significant increase implies that the company’s collection of its outstanding credit account is getting more efficient. It can also be proven from the days of collection itself which has reduced from 83 days to 49 days. Proftability ratio - Profit margin. It can be noticed that in 2005, it has the lowest ratio of as compared to other years amounting to -14.25% followed by -1.03% in 2006. The reason of this negative value for these two consecutive years were due to the inability to control its fuel bills and its operation requirement. However, the company managed to improve its losses by 2008 as its profit margin was enhanced to 1.63%. Next is Return on assets. In the case of MAS’s ROA indicates that there is inefficient use of company's assets because...
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...To be completed by students (typewritten) MODULE NUMBER | | MODULE TITLE | Managerial Accounting | SEMESTER | Fall 2012/2013 | SESSION | | ASSIGNMENT NUMBER | | SUBMISSION DATE DUE | 13.03.2013 | ASSIGNMENT TITLE | Financial performance evaluation of Henkel | INSTRUCTOR’S NAME | Goran Vasilev | To be completed by the front desk secretary or the course administrator SIGNATURE | DATE SUBMITTED | HOUR SUBMITTED | MATERIAL SUBMITTED | | | | Report Diskette/CD | | To be completed by the instructor SIGNATURE & DATE | MARK * | MARK AFTER ORAL (if applicable) | SUBMISSION | | | | On Time Late | | * fill in the slot in the covered area if blind second marking is required Other comments: STUDENT NAME(s) | Elena Donevska | Declaration: All sentences or passages quoted in this coursework from other people's work have been specifically acknowledged by clear cross referencing to author, work and page(s). I understand that failure to do this amounts to plagiarism and will be considered grounds for failure in this coursework and the module examination as a whole. STUDENT REG. NUMBER(s) | 9654 | To be completed by the 2nd examiner (if applicable) SIGNATURE | MARK | | | AGREED FINAL MARK | | STUDENT SIGNATURE(s) | | To be completed by students (typewritten) MARK | | to be completed by instructors...
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...Examples of Questions on Ratio Analysis A: Multiple Choice Questions 1. Which of the following is considered a profitability measure? a. Days sales in inventory b. Fixed asset turnover c. Price-earnings ratio d. Cash coverage ratio e. Return on Assets 2. Firm A has a Return on Equity (ROE) equal to 24%, while firm B has an ROE of 15% during the same year. Both firms have a total debt ratio (D/V) equal to 0.8. Firm A has an asset turnover ratio of 0.9, while firm B has an asset turnover ratio equal to 0.4. From this we know that a. Firm A has a higher profit margin than firm B b. Firm B has a higher profit margin than firm A c. Firm A and B have the same profit margin d. Firm A has a higher equity multiplier than firm B e. You need more information to say anything about the firm's profit margin 3. If a firm has $100 in inventories, a current ratio equal to 1.2, and a quick ratio equal to 1.1, what is the firm's Net Working Capital? a. $0 b. $100 c. $200 d. $1,000 e. $1,200 4. To measure a firm's solvency as completely as possible, we need to consider a. The firm's relative proportion of debt and equity in its capital structure b. The firm's capital structure and the liquidity of its current assets c. The firm's ability to use Net Working Capital to pay off its current liabilities d. The firms leverage and its ability to make interest payments on its long-term debt e. The firm leverage and its ability to turn its assets over into...
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...IMPACT OF INTELLECTUAL CAPITAL ON FINANCIAL PERFORMANCE - AN EMPERICAL STUDY ON THE INDIAN BANKING SECTOR. Abstract: Purpose: Present study makes an attempt to examine the impact of intellectual capital on financial performance of firms based on a sample consisting of 12 Indian banking companies which constituted the CNX Banking index of NSE during 2012-13. More specifically, it seeks to examine the impact of the IC represented by VAIC and the value added, on corporate financial performance measured by return on assets, earnings per share, and return on equity. Design/methodology/approach: In this study VAIC™ is considered as a key valuation model for measuring the IC performance of Indian Banking Companies. Capital employed, human capital and structural capital are used as components of intellectual capital and return on assets (ROA), return on equity (ROE) and Earning Per Share (EPS) indexes are used as criteria of financial performance. The value of three performance measures i.e. Return on Equity (ROE), Return on Assets (ROA), and Earning Per Share (EPS) are obtained from the annual reports of respective banks, whereas the values of VAIC and Value added are computed using appropriate formula and the ranking is made. The companies having highest value is ranked 1, next highest is ranked as 2, and so on. Next, a bar chart is prepared using the computed values of HCE, SCE, CEE representing various components of intellectual capital efficiency which constitute the VAIC...
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...Accounting Information and Predicting Financial Performance Financial ratios are often relied upon as a leading indicator of future financial performance by businesses. These accounting ratios and other company specific accounting information can be especially good predictors in the short run, but as the time horizon extends beyond a few years, these metrics lose predictive value. There are simply too many macro and external factors that the hard numbers cannot account for over the long-run. One way in which these accounting ratios have been tested with regards to predicting future financial performance is by back testing firms that entered bankruptcy. In his study of Italian corporate firms over a 3 year periods, Marco Muscettola used 32 accounting ratios to test the ability of those ratios to forecast future defaults. The two groups of ratios he found to be most predictive were capital structure ratios and debt coverage ratios. This is a logical conclusion as these ratios focus on liquidity and the ability for a company to meet its future obligations. The capital structure ratios evaluate the various ways a company uses debt to create assets by dividing long-term liabilities, debt, and payables by total assets to assess leverage. Debt coverage ratios seeks to evaluate the cost of financing by measuring interest expense as a percentage of total debt and sales and evaluate how total debt compares to sales and current liabilities. Muscettola surmises that it...
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...How can the financial performance of privately owned business be monitored? What are the main ways of monitoring to ensure the sound financial performance of an organization? Make use of examples to illustrate your arguments and answers. Name: XIE Yang (Jasmine) Tutor’s name: Diane Marsh Date: 16/09/2013 Word count: 1403 Introduction A primary responsibility of any business is to understand the financial situation. With this understanding, the company can run accordingly with management. Shen Yuchu (2005) illustrates that it is significant for the privately-owned firms to understand whether profit status influences performance. “Financial performance is measured by the entity’s ability to generate profit after tax, the accumulated change in retained profits and the entity’s ability to generate positive operating cash flows. These metrics were selected as they are standard techniques employed in the private sector when evaluating the performance of firms” (Aulich. C & Hughes. M, 2013). Financial performance with different ownership may be overseen in different aspects, so privately owned companies should be monitored from a specific perspective. This paper will examine the sound measures to monitor the financial performance in privately owned business. Firstly, some financial measures will be introduced to monitor the performance from the privately-owned nonprofit entities, presenting by a health center in the USA. Next to this, Melbourne...
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...Gap Inc. and Nike, Inc. Overview Gap Inc. and Nike, Inc. Overview Financial Performance: Nike, Inc and Gap Inc. Nike, Inc. and Gap Inc. achieved top ranks for specialty retailers of 2007 according to CRO (Corporate Responsibility Officer, 2007) Magazine for “100 Best Corporate Citizens 2007.” Shareholders review various financial reports which help determine which organization yields the greatest profits and minimum loss in cash flow. This review contains two-year comparisons for Nike, Inc. and Gap Inc. by analyzing ratios for Liquidity and Asset Utilization, Debt and Interest Coverage, and Market based ratios. Analysts evaluate market and industry trends periodically that help determine where a company is most profitable. Usually, stockholders are interested in profitability ratios. However, lenders and suppliers favor liquidity ratios detailing how assets compare with current liabilities. Respectively, according to results for Liquidity and Asset Utilization, the current ratios, (current assets / current liabilities) shows for every $1.00 of current liabilities for Nike, Inc. has 3.1:1 (2007) and 2.8:1 (2006). On the other hand, Gap Inc. has 2.2:1 (2007) and 2.7:1 (2006). Specialty retailers’ average return is greater than 3 and the general retail average is 1.0 - 1.2. Nike, Inc. at 3.1:1 (2007) has the greatest financial responsibility to pay bills over the next year timely. However, Gap Inc. also has money to meet obligations with a 2.7:1 (2006) which is generally...
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