...Financial Ratio Comparison of Tesco Plc and Sainsbury Plc Introduction Abraham Brilloff once said, “Financial statements are like a fine perfume-to be sniffed but not swallowed.” This means to make rational decisions in keeping with objectives of the firm by busing the financial statements (Helfert, 2003), it is important to critical and analytical sniff but to simply swallow the statistical information from the statements. Using what tools to get into the deep sight of financial statement and see the beautiful sight of the financial world is what the essay focuses about (Matsumoto, Melkote & James, 1995). This essay centers on demonstrating and understanding of the purpose of financial ratios analysis, applying a range of financial accounting ratios to analyze and interpret financial statements and trend analysis of financial statements, using these ratios to critically evaluate the comparable companies’ performance and critically propose constructive suggestion to the discussed companies. And this essay selects Tesco Plc and Sainsbury Plc as a set of basement to analyze financial ratios of the companies’ financial statements. Tesco Plc and J. Sainsbury Plc are the comparable companies. Tesco Plc, whose headquarters are in UK, is one of the world's largest retailers with operations in 14 countries. Tesco Plc operates not only store mainly offering food, general merchandise, clothing, and electrical products, but also finance service, such as retail banking, financial, and...
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...2006, 2007 and 2008 to analyze the ratios, and conduct a DuPont analysis to find the competitive position and the level of performance of both the organizations in respect to the calculated ratios. In addition we have done index analysis of both balance sheet and income statement to find the position of the organizations in respect of profitability. The organizations are pharmaceutical companies. The reason behind calculating the ratios of different years of a company gives us a complete view about company’s gradual improvement or decline. The chosen company has gained significant popularity in the market of Bangladesh and has been running the business for a considerable period. The report consists of five types of ratio analysis which are as follows: 1. Liquidity Ratio 2. Financial Leverage Ratios 3. Interest Coverage Ratio 4. Activity ratios 5. Profitability Ratios Under these primary categories there are several other sub categories. I calculated those ratios and provided interpretation of the results and also evaluated the company’s position in terms of their results. Last but not the least we did the index analysis of the balance sheet and income statement. We found some problems in the financial activities of the company and provided recommendations based on that. 2. Introduction Ratio analysis is a numerical attempt to analyze the performance and financial position of a business. By converting absolute numbers into ratios, we can compare between one firm and...
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...PROJECT 2 FINANCIAL RATIO ANALYSIS: 2 Purposes and considerations of ratio analysis 2 PHARMACEUTICAL INDUSTRY IN PAKISTAN 3 FEROZSONS LABORATORIES LIMITED 4 LIQUIDITY ANALYSIS RATIOS 4 Current Ratio: 4 Quick Ratio 5 Working Capital: 6 Absolute Liquid Ratio: 8 SOLVENCY RATIOS (Capital Structure Analysis Ratios) 9 Debt Ratio 9 Debt to Equity Ratio 9 Interest Coverage Ratio 10 Equity Ratio 12 Assets to Equity Ratios 13 PROFITABILITY ANALYSIS RATIOS: 14 GENERAL PROFITABILITY: 14 Gross profit ratio/ margin: 15 Operating Expense Ratio: 16 Operating Profit Margin: 17 Net Profit Ratio: 18 OVERALL PROFITABILITY: 19 Earnings per Share (EPS): 19 Return on Equity (ROE): 20 Return on Assets (ROA): 21 Return on Capital Employed: 22 ACTIVITY ANALYSIS RATIOS 23 Operating Cycle 27 Assets Turnover Ratio 30 Working Capital Turnover Ratio 31 CAPITAL MARKET ANALYSIS RATIOS 32 Price earnings ratio(PE): 32 Dividend Yield Ratio 34 Market to Book Ratio 35 Dividend Payout Ratio 36 STATIC ANALYSIS: 37 REFERENCES: 44 INTRODUCTION TO THE PROJECT The project covers the trend analysis of Ferozsons, a pharmaceutical company in Pakistan, and the static analysis of the same with its major rival, Glaxo Smith Kline Pakistan Limited FINANCIAL RATIO ANALYSIS: The financial statements are essential but they are only the starting point for successful financial management. Financial Ratio Analysis is applied to Financial Statements...
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...Griffith University, Gold Coast | Group Assignment for 2204AFE Financial Institutions Management | Comparative Analysis of ANZ and Westpac | | s2758329, s2762895, s2773847, s2784238Diamond, E., Dong, G., Huang, Y. & Lin, B.Due: 5th April 2012Tutor: Sonja Kobinger | | | The following report is a brief comparative analysis of two of Australia’s largest deposit-taking financial institutions (FI), Australia and New Zealand Banking Group Ltd. (ANZ) and Westpac Banking Corporation (Westpac). This report seeks to identify which of the FIs has a greater aggregate return per dollar of equity and thus establish the highest performer, or most profitable, of the two. The Return on Equity Model (ROE) (Koch & MacDonald, 2010, pg. 96) is a series of ratios constructed to evaluate the financial position of FIs and utilised, in this case, to compare the performance, or profitability, of ANZ to Westpac. By applying ROE, and its associated ratios, to the 2011 Financial Reports of ANZ and Westpac, this report aims to justify the conclusion that Westpac outperformed ANZ for the 2011 financial year. ROE is widely accepted as an accurate reflection of the overall performance of FIs. For the financial year 2011, ANZ had a ROE ratio of 14.87% compared with Westpac’s 16.82% (Appendix A). This ratio indicates that, before paying cash dividends, the aggregate return for shareholders of ANZ is 1.95% lower than its Westpac counterparts (Koch & MacDonald, 2010, pg. 98). While...
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...Objective: Ratio analysis expresses the relationship among selected items of financial statement data. A ratio expresses the mathematical relationship between one quantity and another. The relationship is expressed in terms of a percentage, a rate or a simple proportion. Ratios can provide clues to underlying that may not be apparent from individual financial statement component. However, a single ratio by itself is not very meaningful. For discussion making the companies use the following types of comparisons. a. Intra-company comparisons b. Industry average comparisons c. Intercompany comparisons Methodology: For our report we have collected the financial reports of the following companies (for the year 2009 and 2010): 1. Apex Tannery 2. Monno Ceramic 3. Bata Shoe 4. Meghna Cement & 5. Fu-wang Food We have calculated the following ratios for the each of the companies for both years: 1. Current ratio 2. Quick ratio 3. Inventory turnover ratio 4. Long term debt ratio 5. Debt to total asset ratio 6. Total asset turnover 7. Times interest earned ratio We have found the average value of each of the ratios for the organizations. We made intercompany comparison based on the average value of these ratios to identify the best and the worst company. In the end we tried to identify the reasons which caused the best and the worst companies to have those ratios. Description of the Ratios: 1. Liquidity...
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...a.) Ratios are useful indicators of a firm's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms in the same industry. Managers use ratio analysis to identify situations needing attention; potential leaders use financial analysis to determine whether a company is creditworthy; and stockholders use ratio analysis to help predict future earnings, dividends, and free cash flow. b.) The 2011 current ratio is calculated by using the following formula: current assets/current liabilities= 2,680,112/1,039,800= 2.58:1 The 2011 quick ratio is calculated by using the following formula: current assets-inventories/current liabilities=2,680,112-1,716,480/1,039,800=.93:1 The higher the current ratio the better the company’s liquidity because it provides insight about a firm's ability to meet its short-term financial obligations; therefore after calculating the 2009, 2010, and projected 2011 current ratio using the current assets/current liabilities formula we find the following ratios: 2009: 1,124,000/481,600=2.33:1 2010: 1,946,802/1,328,960=1.46:1 projected 2011: 2,680,112/1,039,800=2.58:1 The projected 2011 balance sheet leads us to believe that the year 2011 will have more liquidity than in the previous 2 years. Ratios are very useful to managers, bankers and stockholders for various reasons...
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...2005-2006 FALL SEMESTER Financial Ratio Analysis Content Introduction………………………………………p.3 Overview of AT&T………………………………p.4 Overview of China Mobile (HK) Ltd…………….p.5 Overview of Hutchison…………………………..p.6 Overview of New World Mobility……………….p.7 Overview of SmarTone…………………………..p.8 Overview of Sunday……………………………...p.9 Overview of Verizon…………………………….p.10 Financial Ratio Analysis…………………..…p.11-19 Conclusion…………………………………...p.20-22 INTRODUCTION In this project, we aim to find out the most outstanding telecommunications company for investors to invest on by using financial ration analysis. The seven firms under investigation in this project are AT&T (US), China Mobile (Hong Kong) Ltd., Hutchison Telecommunications Ltd., New World Mobile Ltd., SmarTone-Vodafone, Sunday Communications Ltd., Verizon Communication (US). We are going to begin our analysis by a series of overviews on each firm and related processed data. It is then followed by a clear analysis on the financial ratio of each firm and finally a well-supported conclusion will be provided to end up this project. This project is carried out under certain assumptions. It is presumed that there are only 7 firms in the telecommunication market for our investor to make accurate calculation and recommendation. There is also an elimination of all other resources except the financial records, which are taken under consideration in this analysis. The conclusion generated...
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...Financial Ratio Analysis By 107,108,109,158,159,161 Group 3 MBA (Tech) IT 4Th Year Table of Contents 1.0 Liquidity Ratio…..……………………………………………..………………………………………………………..……………3 1.1 Current Ratio 4 1.2 Quick Acid Test 5 2.0 Debt Ratio…..…………………………………………………………………………………………………………………..………9 2.1 Debt to Equity Ratio 6 2.2 Total Debt to Equity Ratio 6 2.3 Debt to Total Assets Ratio 7 2.4 Capital Gearing Ratio 8 2.5 Proprietors funds to total assets 8 2.6 Long term debt-total capitalization 9 2.7 P-E ratio 9 3.0 Coverage Ratio…..……………….…………………………………………………………………………………………………14 3.1 Interest coverage ratio 11 3.2 Dividend coverage ratio 11 3.3 Debt-Service Coverage ratio 12 4.0 Turnover Ratio…..……………….…………………………………………………………………………………………………16 4.1 Receivable Turnover Ratio 13 4.2 Receivable Turnover Ratio in days 13 4.3 Payable turnover ratio 14 4.4 Payable turnover ratio in days 14 4.5 Inventory Turnover ratio 15 4.6 Inventory Turnover ratio in days 15 4.7 Operating cycles 16 4.8 Cash Cycle 16 4.9 Total assets turnover ratio 16 4.10 Fixed asset turnover ratio 17 4.11 Total capital turnover ratio 17 4.12 Working capital turnover ratio 18 5.0 Profit & Loss ratio….………………………………………………………………………………………………………………22 5.1 Gross Profit Margin 19 5.2 Operating Profit Margin 19 5.3 Pre Tax Margin 20 5.4 Net Profit Margin 20 6.0 Expense Ratio…..……………………………………………………………………………………………………………………24 6.1 Cost of goods sold ratio 21 6...
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...Interpretation of the Ratios 1) Current Ratio-It is a test of solvency or of short-term financial strength of a concern. It is an index of working capital and shows the ability of the concern to meet its obligations and also the capacity to carry on effective operations. Generally, if current assets are twice that of current liabilities, the concern’s working capital position is considered to be satisfactory. 2) Quick Ratio-It shows the amount of cash available to meet immediate payments. Stock-in –trade is deducted from current assets because it is not considered that stock will supply cash as readily as debtors or bills receivable. Bank overdraft is deducted from current liabilities as it is normally considered to be a simple particular way of financing an enterprise and as such is not considered liable to be called in on demand. 3) Inventory Turnover Ratio-It is a ratio showing how many times a company’s inventory is sold and replaced over a period. The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand or “Inventory turnover days” Sales may be substituted with COGS because sales are recorded at market value while inventories are usually recorded at cost. Average inventory may be used instead of the ending inventory level to minimize seasonal factors. The ratio should be compared against industry averages. A low turnover implies poor sales and therefore excess inventory. A high ratio implies either...
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...FINANCIAL ANALYSIS FOR THE TELECOM SECTOR- A REPORT BY GROUP-4, SECTION-C AMAN SAHNI(4C) GAURAV SHARMA(16C) NEHA DEOLIYA(24C) PRATEEK GOEL(28C) SRIVATHSAN S.(43C) 1 INDEX 1. INDUSTRY OVERVIEW 2. COMPANY ANALYSIS 3.COMPETITIOR ANALYSIS 4. CONCLUSIONS 3 6 11 15 2 1. INDUSTRY OVERVIEW Introduction The telecommunication industry has been growing at a tremendous rate in India for the last few years. More than 18 million subscribers are added every month. Driven by various policy initiatives, the Indian telecom sector witnessed a complete transformation in the last decade. It has achieved a phenomenal growth during the last few years and is poised to take a big leap in the future. The telecom industry has been divided into two major segments, that is, fixed and wireless cellular services for this report. Besides, internet services, VAS, PMRTS and VSAT also have been discussed in brief in the report. In today’s information age, the telecommunication industry has a vital role to play. Considered as the backbone of industrial and economic development, the industry has been aiding delivery of voice and data services at rapidly increasing speeds, and thus, has been revolutionising human communication. Although the Indian telecom industry is one of the fastest-growing industries in the world, the current teledensity or telecom penetration is extremely low when compared with global standards. India’s teledensity of 36.98% in FY09 is amongst the lowest in the world. India's...
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...FINANCIAL DECISION MAKING FOR MANAGERS: Ratio And Financial Statement Analysis NAME: JAMES B. TAYLOR DATE: 04/09/2015 Table of Content I. Executive Summary.....................................................................................3 II. Introduction..................................................................................................4 III. Financial statements tools and techniques...................................................4 IV. Exhibits…………………………………………………………………...10 V. Analysis of Results.....................................................................................11 VI. Recommendations……………………………….......................................13 VII. Conclusions……………………………………………………………….13 VIII. References………………………………………………………………...14 Executive summary This paper is focused to assess financial health of a business firm. I have chosen one of the leading retail companies in the country (Higgins, 2011). This paper will carry out a financial analysis on Hamster Limited in order to have a comprehensive assessment about its financial health analysis. This paper will analyze and assess the financial environment in which the company operated. Through a comprehensive analysis, my objective is to understand the influence of financial factors in the firm and its decision making. I will evaluate different ratios to acknowledge their impact on Hamsters performance over the few years. I will identify, assess and interpret...
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...Financial Reporting Analysis Ratio Analysis Of Colgate Palmolive (INDIA) Limited Submitted to: Dr. T. P. GHOSH Submitted by: Group I 1. Apurva Shahi 2. Deepali Agarwal 3. Konda Moulika 4. Mallipati Manoj 5. Mitali Pravin 6. Nidhi Agarwal Contents: 1. Abstract 2. Introduction and details of project 3. Colgate Palmolive( India) Limited Profile 4. Ratio Analysis of Colgate Palmolive( India) Limited I. Profitability Ratios II. Liquidity Ratios III. Solvency Ratios IV. Turn-Over Ratios V. Valuation Ratios 5. Conclusion Abstract: A financial statement is a collection of data organized according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspect of a business firm. Financial analysis (also referred to as financial statement analysis or accounting analysis) refers to an assessment of the viability, stability and profitability of a business, sub-business or project. It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decision. The present paper explains...
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...Hampshire Scholars' Repository Honors Theses Student Scholarship Fall 2012 An Analysis of Fraud: Causes, Prevention, and Notable Cases Kristin A. Kennedy University of New Hampshire - Main Campus, kaj79@wildcats.unh.edu Follow this and additional works at: http://scholars.unh.edu/honors Part of the Accounting Commons Recommended Citation Kennedy, Kristin A., "An Analysis of Fraud: Causes, Prevention, and Notable Cases" (2012). Honors Theses. Paper 100. This Senior Honors Thesis is brought to you for free and open access by the Student Scholarship at University of New Hampshire Scholars' Repository. It has been accepted for inclusion in Honors Theses by an authorized administrator of University of New Hampshire Scholars' Repository. For more information, please contact scholarly.communication@unh.edu. An Analysis of Fraud: Causes, Prevention, and Notable Cases University of New Hampshire Honors Thesis in Accounting Kristin Kennedy ADMN 799 Professor Le (Emily) Xu Fall 2012 Table of Contents I. II. III. IV. V. VI. VII. Background……………………………………………………………........1 a. What is accounting and what role does financial reporting serve?..........1 b. History of accounting standards………………………………………..2 c. Role of auditing………………………………………………………...5 Fraud……………………………………………………………………….6 a. Two types of fraud……………………………………………………..6 i. Misappropriation of Assets…………………………………….7 ii. Misrepresentation of Financial Statements…………………….7 b. Fraud Triangle………………………………………………………….8 c. What to look...
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...Applied Managerial Finance Financial Analysis: Financial Statement Ratios and Metrics November 30, 2013 Financial Analysis: Financial Statement Ratios and Metrics Mary has asked me to provide a list of financial ratios that she needs explained and a computation of each for Apex Printing. She would also like to see a comparison of these ratios to other firms in the printing sector. I am going to provide an indication of how each of these ratios differ from Apex’s and whether or not the ratio is indicative of better performance by Apex (Task List, 2013). Financial ratios are used to look at how an organization performs and what kind of financial situation they may be in. Information that is provided in the financial statement is used to calculate these ratios. Ratios show trends and as comparisons to other organizations. They also have the capability to predict bankruptcy. There are several different types of ratios used according to the particular type of information they want to provide. These are liquidity, asset turnover, financial leverage, profitability and dividend policy ratios (NetMBA, n.d.). Explain and compute Current ratio of Apex Short-term financial obligations can be seen in the liquidity ratio. Short-term creditors use this information to determine whether or not to extend credit to an organization. Current ratio and the quick ratio are the most frequently used ratios in this area (NetMBA, n.d.). As one of the most popular ratios used to compute a company’s...
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...9-193-029 REV: SEPTEMBER 13, 2004 WILLIAM BRUNS Introduction to Financial Ratios and Financial Statement Analysis There is almost always a reason why someone picks up an organization’s financial statements and begins to analyze them. Lenders or creditors may be interested in determining whether they will be repaid money they have lent or may lend to the organization. Investors may be interested in comparing a potential investment in one organization with that of another. Employees may want to compare the current performance or financial status of their employer with earlier periods. Regulatory agencies often need to assess organizational or industry financial health and performance. Financial analysis is always based on a set of questions, and the specific questions requiring answers depend on who the financial statement user is and the reasons for his or her analysis. Financial analyses based on accounting information consistently involve comparisons. Amounts or ratios may be compared with industry norms, the same measurement in a prior period, the same measurement in a competitor’s organization, or with planned and budgeted amounts previously established. Figuring out which comparisons will best answer the questions motivating the analysis is one of the necessary steps in making the best use of accounting information. Financial ratios can help describe the financial condition of an organization, the efficiency of its activities, its comparable profitability...
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