...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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...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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...REPORT ON ―ANALYSIS OF FINANCIAL STATEMENT BY USING THE TECHNIQUE OF RATIO ANALYSIS” FOR ULTRA TECH CEMENT LTD AT KOVAYA, AMRELI, GUJARAT SUBMITTED TO TILAK MAHARASHTRA UNIVERSITY IN PARTIAL FULFILLMENT OF 2 YEARS FULL TIME COURSE MASTER OF BUSINESS ADMINISTRATION (MBA) Submitted By: FURKAN Y. KAMDAR (Batch 2008-10) Guided By: Prof.R.GANESHAN MAHARASHTRA COSMOPOLITAN EDUCATION SOCIETY’S PAI INTERNATIONAL CENTRE FOR MANAGEMENT EXCELLENCE CAMP PUNE-411001 1 Maharashtra Cosmopolitan Education Society’s PAI International Centre for Management Excellence CERTIFICATE This is to certify that FURKAN Y.KAMDAR student of PAI INTERNATIONAL CENTRE FOR MANAGEMENT EXCELLENCE, Maharashtra Cosmopolitan Education Society, Pune has completed his field work at ULTRA TECH CEMENT LTD on the topic of ―FINANCIAL STATEMENT ANALYSIS BY USING THE TECHNIQUE OF RATIO ANALYSIS”FOR ULTRA TECH CEMENT LTD and has submitted the field work report in partial fulfilment of 2 years full time course MASTER IN BUSINESS ADMINISTRATION of college for the academic year 2008-2009 He has worked under our guidance and direction. The said report is based on bonafide information. Project Guide Name Prof. R Ganesan Designation Director Pai International Centre for Management Excellence Date: Place: Pune 2 PAI INTERNATIONAL CENTRE FOR MANAGEMENT EXCELLENCE Maharashtra Cosmopolitan Education Society DECLARATION I hereby declare that the project titled ―FINANCIAL STATEMENT ANALYSIS OF ULTRATECH...
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...FINANCIAL STATEMENT ANALYSIS: A TOOL FOR PERFORMANCE EVALUATION A Case Study of Oceanic Bank By IBRAHIM UMAR PGA/09/07766 M.Sc. Assignment Submitted to Dr. M.I. Kida CNA Department of Accountancy University of Maiduguri 2Financial Statement Analysis: A Tool for Performance Evaluation Jan. 2010 3Financial Statement Analysis: A Tool for Performance Evaluation ABSTRACT Financial statements are prepared to meet external reporting obligations and also for decision making purposes. They play a dominant role in setting the framework of managerial decisions. But the information provided in the financial statements is not an end in itself as no meaningful conclusions can be drawn from these statements alone. However, the information provided in the financial statements is of immense use in making decisions through analysis and interpretation of financial statements. There are various methods or techniques that are used in analyzing financial statements, such as comparative statements, schedule of changes in working capital, common size percentages, trend analysis and ratios analysis. This study intends to analyze financial statement of Oceanic bank in Nigeria in order to come up with an in-depth fact finding on its performance and to see if there is any connection between the recent global economic crisis and its overall performance. 4Financial Statement Analysis: A Tool for Performance Evaluation INTRODUCTION 1.1 Background Financial statement represents...
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...Ratio and Financial Statements Analysis Kimberly Y. Gruber University of Maryland University College Dr. Sunando Sengupta 07/25/2013 Turnitin Score: 23% Executive Summary The purpose of this paper is to examine ratio and financial statement analysis. Such analysis is a useful tool for managers and stakeholders to evaluate a company’s financial health in order to identify opportunities for growth and areas of weakness so as to institute corrective measures. Financial statements are used in order to predict trends of cash flow within the business as well as predict the potential of a business and if they are capable of financial growth. Ratio analysis examines the probability of a company’s profit or a company’s loss. This paper will examine the benefits and limitations of ratio analysis, explain what factors impact the meaningfulness of such measures and what new practices or theories may be emerging regarding the application of ratio and financial statement. The paper concludes that ratio and financial statements is an essential tool used in analyzing a company’s profit. Introduction to Ratio and Financial Statement Analysis Though there are various methods for monitoring the liquidity of businesses the most common has been the use of financial ratios. Ratio analysis is an established technique—involving the relationship between two or more variables--that is used to conduct qualitative analysis of information contained in a company’s financial statement to...
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...Statistical Tools for Financial Research Anna Hemmer University of Phoenix Statistical Tools for Financial Research The financial condition of an organization is identified through data provided in formal records called financial statements. Financial statements provide an accurate account of a company’s financial position and cash flow of the business. Stakeholders used the data to make decisions regarding future purchases, investments, and profitability of the organization. Analyzing financial statements consists of using various methods (statistical tools) including comparative statements, schedule of changes in working capital, common size percentages (analysis), fund analysis, trend analysis, and ratio analysis. The purpose of this paper is to review the financial statements of one domestic, and one global organization from the Financial Times 500. The two companies for review are the McDonald’s and Samsung organizations. The data provided in the financial statements will convert into a ratio analysis. Common size analysis, and accounting analysis limitations are tools for review. The pros and cons of each of these statistical tools will also be discussed. To understand the importance of statistical tools, a review of ratio analysis, common size analysis, and accounting analysis limitation will be the starting point for this paper. Ratio Analysis Ratio analysis is the most powerful tool of financial analysis (Accounting for Management, 2012, para. 1) used...
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...Financial Statement 1 Financial Statement Analysis YOUR NAME Axia College of University of Phoenix Financial Statement 2 Financial statements are often t he life line of a company. These statements show a company manager how viable the organization is and how profitable it has been. If this financial statement is not interpreted right it could cause the reader to make some serious mistakes when making the firm’s financial decisions. Financial statements provide an overview of the businesses financial conditions. There are four basic types of financial statements. The first is the balance sheet which reports a company’s assets, liabilities and net equity for a certain period. An income statement also known as profit and loss statement reports the company’s income, expenses and profits. The retained earning statement explains the changes in a companies retained earnings over a period. A cash flow statement shows the companies cash flow activities. These figures come from the companies operating, investing and financial activities. To sum things up these statements shows a company where there money has gone and profitable they have been. They shown an overall risk-return profile and if the mix of debt and equity financing is profitable. Lenders such as banks or bond buyers are interested in financial statements because through them they can determine if their interest and principles Financial Statement 3 can...
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...Financial Statement Analysis Financial Statement Analysis 39 Common‐Size Financial Statements • Balance sheet items as a percentage of ______________________. Income statement items as a percentage of ______________________. • 40 Suzie Q Corporation Balance Sheet December 31, 2011 Assets: Current Assets: Cash Accounts Rec. Inventory Total CA Fixed Assets: Net Fixed Assets Total Assets Liabilities & Equity: Current Liabilities: 12.5% Accts. Payable 21.9% Notes Payable Total CL 24.2% 58.6% Long‐term Debt: Common Stock 41.4% Retained Earnings 100.0% Total Liab. & S.E. $ 80 140 155 $375 265 $640 $ 95 110 $205 120 40 275 $640 14.8% 17.2% 32.0% 18.8% 6.2% 43.0% 100.0% 41 FINC 3610 ‐ Yost Financial Statement Analysis Suzie Q Corporation Income Statement For Year Ended December 31, 2011 Sales Cost of Goods Sold SG&A Expenses Depreciation EBIT Interest Expense EBT Taxes Net Income $910 470 210 60 $170 40 $130 52 $78 100.0% 51.6% 23.1% 6.6% 18.7% 4.4% 14.3% 5.7% 8.6% 42 Classification of Financial Ratios • • Short‐term Solvency or Liquidity Ratios Long‐term Solvency or Financial Leverage Ratios Asset Management or Turnover Ratios Profitability Ratios Market Value Ratios 43 • • • Short‐term Solvency (Liquidity) Ratios • Current Ratio • Quick (Acid‐Test) Ratio • Cash Ratio • Net Working Capital to Total Assets • Interval Measure 44 FINC 3610 ‐ Yost Financial Statement Analysis Long‐term Solvency (Financial Leverage) Ratios ...
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...QXD 06/29/2006 06:16 PM Page 150 FIRST PAGES 5 ANALYSIS OF FINANCIAL STATEMENTS Reviewing and Assessing Financial Information Starting Point Go to www.wiley.com/college/Melicher to assess your knowledge of the basics of financial statement analysis. Determine where you need to concentrate your effort. What You’ll Learn in This Chapter ▲ ▲ ▲ ▲ ▲ ▲ ▲ The five basic types of financial ratios How to use financial ratios properly in order to achieve financial growth When to use specific ratios in different situations How internally generated financing occurs The effect of ratio analysis on long-term financial planning How to read a financial statement The application of the cost-volume-profit analysis concept After Studying This Chapter, You’ll Be Able To ▲ ▲ ▲ ▲ ▲ ▲ Distinguish the three categories of ratio analysis Compare and contrast financial statements from different companies Examine the link between asset investment and sales growth Apply the major components of Du Pont analysis Analyze the quality of financial reports Use analysis methods to evaluate profit levels Goals and Outcomes ▲ ▲ ▲ ▲ ▲ ▲ Analyze and interpret financial statements Explain the categories of ratio analysis Perform the basic types of financial ratios Manage the application of ratios to evaluate business performance Prepare the requirements for external financing Evaluate the financial viability of particular business alternatives 2059T_c05_150-188...
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...Financial statement analysis (or financial analysis) the process of understanding the risk and profitability of a firm (business, sub-business or project) through analysis of reported financial information, by using different accounting tools and techniques. Financial statement analysis consists of 1) reformulating reported financial statements, 2) analysis and adjustments of measurement errors, and 3) financial ratio analysis on the basis of reformulated and adjusted financial statements. The first two steps are often dropped in practice, meaning that financial ratios are just calculated on the basis of the reported numbers, perhaps with some adjustments. Financial statement analysis is the foundation for evaluating and pricing credit risk and for doing fundamental company valuation. 1. Financial statement analysis typically starts with reformulating the reported financial information. In relation to the income statement, one common reformulation is to divide reported items into recurring or normal items and non-recurring or special items. In this way, earnings could be separated in to normal or core earnings and transitory earnings. The idea is that normal earnings are more permanent and hence more relevant for prediction and valuation. Normal earnings are also separated into net operational profit after taxes (NOPAT) and net financial costs. The balance sheet is grouped, for example, in net operating assets (NOA), net financial debt and equity. 2. Analysis and adjustment of...
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...METHODS OF FINANCIAL ANALYSIS Dorothy E Vincent-Greene ACC 281 Accounting Concepts for Health Care Professionals Professor James Bell 26 MAY 2014 The process of restating and summarizing data by establishing ratios and trends is known as a financial analysis. The financial statement analysis is the process of examining and identifying the relationships among financial statement elements and making comparisons with relevant information. The analysis is a powerful tool used by a variety of people like creditors, investors, and managers, etc. who all have different reasons for learning about the financial circumstances of an organization (Financial Statement Analysis, 2014). There are a variety of tools that can be used to evaluate the financial statements data. The three most commonly used tools are the ratio analysis, horizontal analysis, and vertical analysis. In this paper I plan to evaluate these three methods and discuss how the financial information is used to make certain business decisions, while giving an example that may be seen in the health care arena. The ratio analysis is a method of analyzing data to determine the overall financial strength of a business. The broad method by which the financial data is converted into simple mathematic ratios for comparison makes it easy very user friendly. An advantage to this method is that it can be used by anyone with access to organizations public financial statements since the data is widely available. Calculations...
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...1. EXECUTIVE SUMMARY Financial analysis is the starting point for making plans, before using any sophisticated forecasting and planning procedures. Understanding the past is a prerequisite for anticipating the future. Financial analysis is the process of identifying the financial strength and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. Financial analysis can be undertaken by management of the firm, or by parties outside the firm, viz. owners, creditors, investors and others. The nature of analysis will differ depending on the purpose of the analyst. 1. Investors: Who invested their money in the firm’s shares, are most concerned about the firm’s earnings. They more confidence in those firm’s that show steady growth in earnings. As such, they concentrate on the analysis of the firm’s present and future profitability. They are also interested in the firm’s financial structure to that extent influence the firm’s earning ability and risk. 2. Trade creditors and financial institution: they are interested in firm’s ability to meet their claims over a very short period of time. Their analysis will, therefore, confine to the evolution of the firms liquidity position. And the financial institutions are interested in the financial statements of the borrowing concern to ascertain its short- term as well as long-term solvency and also it profitability. 3. Suppliers: On the other hand, are concerned...
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...Definition of 'Financial Statement Analysis' Financial statement analysis (or financial analysis) is the process of understanding the risk and profitability of a firm (business, sub-business or project) through analysis of reported financial information, by using different accounting tools and techniques. Financial statement analysis is an evaluative method of determining the past, current and projected performance of a company. Several techniques are commonly used as part of financial statement analysis including horizontal analysis, which compares two or more years of financial data in both dollar and percentage form; vertical analysis, where each category of accounts on the balance sheet is shown as a percentage of the total account; and ratio analysis, which calculates statistical relationships between data. Objectives of Financial Statement Analysis The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions (IASB Framework). The major objectives of financial statement analysis are as follows 1. Assessment of Past Performance:Past performance is a good indicator of future performance. Investors or creditors are interested in the trend of past sales, cost of goods sold, operating expenses, net income, cash flows and return on investment. These trends offer a means for judging management's past performance...
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...Financial Management Course code- 206 Term paper on: “Financial Statements Analysis of Reckitt Benckiser” Submitted to: Prof. Dr. A.A. Mahboob Uddin Chowdhury Professor, Department of Finance University of Dhaka Submitted by: Group No.12 SL | Name | ID | Remarks | 01 | Mohammad Monirul Islam Monir | 19-030 | | | | | | | Date of submission: 7th December, 2014 Letter of Transmittal: Professor, Department of Finance University of Dhaka Dear Sir, Here is the report you have assigned as a part of the course requirement. We have taken this assignment as an opportunity to reflect our understanding about the basic concepts and the application of Financial Management. Although we have tried our level best to adhere to your teachings, we realize that our report may not be flawless. We hope that you will be kind enough to remark on the strengths and weakness of this report. It will help us to be prepared properly to write a better report on such subjects in future. We look forward to making the optimal use of the knowledge. We have achieved not only the basic concepts business finance from your classes but also the application of it in the practical world. Once again, thank you for making our Financial Management course (F-206) class an enlightening and enjoyable experience. Best regards On behalf of the group members, Chandan Kumar Roy Roll: 19-164 Acknowledgement The project was the endeavor of a great experience...
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