...Calculate the following: Current ratio, long-term solvency ratio, contribution ratio, programs/expense ratio, general and management/expense ratio, and revenue/expense ratio for the years 2003 and 2004. Current Ratio: 2003 Current Ratio = Current Assets Current Liabilities Current Ratio =82,058 93,975 Current Ratio = 0.87 2004 Current Ratio = Current Assets Current Liabilities Current Ratio =302,902 337,033 Current Ratio = 0.90 (rounded -up) Long-Term Solvency Ratio: 2003 Long-Term Solvency Ratio Total = Total Assets Total Liabilities Long -Term Solvency Ratio = 359,863 259,979 Long -Term Solvency Ratio =1.38 2004 Long-Term Solvency Ratio Total = Total Assets Total Liabilities Long -Term Solvency Ratio = 699,004 338,937 Long -Term Solvency Ratio = 2.06 Contribution Ratio: 2003 Contribution Ratio = Last Revenue Source Total Revenue Contribution Ratio = 632,889 1,244,261 Contribution Ratio =0.51 (rounded -up) 2004 Contribution Ratio = Last Revenue Source Total Revenue Contribution Ratio =1,078,837 2,191,243 Contribution Ratio = 0.49 Programs/Expense Ratio: 2003 Program/Expense Ratio = Total Revenue Total Expense Program / Expense Ratio =1,244,261 1,316,681 Program / Expense Ratio =1.0 2004 Program/Expense Ratio = Total Revenue Total Expense Program/Expense Ratio = 2,191,243 1,972,131 ...
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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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...BMW AG; Financial Performance Analysis This paper is prepared by: Asif Ahmed BBA 13th Batch Department of Accounting & Information Systems Faculty of Business Studies University of Dhaka, Bangladesh E-mail; asif.ahmed0001@yahoo.com Cell Phone; +8801922939126 BMW AG; Financial Performance Analysis (Asif Ahmed) 1 of 24 Executive Summary: The world is just recovering from a big recessio n. Various big corporations became bankrupt because of this. Many of the automaker giant posted loss during the last 2 or three years, like – Toyota and the biggest corporation of the world General Electric (GE) became bankrupt. More or less all the big corporations are affected by it. BMW, one of the automaker giant, could retain its’ profitability over last three years when the global recession take place. It also affected by the recession but cannot lose the profitability. This interesting thing inspires me to conduct research on the financial performance of BMW AG. In the beginning of my paper I give an overview on the BMW. Later I analyze the net profit, sales revenue, costs and assets base of the corporation for the last 10 years. Then I go for ratio analysis to judge the financial health of the organization. In ratio analysis I use Return of Assets (ROA), Return on Equity (ROE), Basic Earning Power (BEP), Liquidity ratio, Profitability Ratio, Divided Payout (DP) Ratio and Du Pont Chart to conduct my analysis. The findings on the analysis are discussed along...
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...S.Afr.J.Bus.Manage.2011,42(3) 17 Agency costs, corporate governance mechanisms and performance of public listed family firms in Malaysia H. Ibrahim* School of Management, Universiti Sains Malaysia, 11800 USM, Penang, Malaysia haslindar@usm.my F.A. Samad Faculty of Business and Accountancy, University of Malaya, 50603 Kuala Lumpur, Malaysia mfazilah@um.edu.my Received June 2009 We compare corporate governance and performance between family and non-family ownership of public listed companies in Malaysia from 1999 through 2005 measured by Tobin’s Q and ROA. We also examine the governance mechanisms as a tool in monitoring agency costs based on asset utilization ratio and expense ratio as proxy for agency costs. We find that on average firm value is lower in family firms than non-family firms, while board size, independent director and duality have a significant impact on firm performance in family firms as compared to non family firms. We also find that these governance mechanisms have significant impact on agency costs for both family and non family firms. *To whom all correspondence should be addressed. Introduction The family-controlled firm or family ownership is the most common form of business organization in the world. A various stream of literature explains that family ownership is central in most countries. La Porta, Lopez-De-Silanes, and Shleifer (1999) studied the 20 largest publicly traded companies in the richest 27 countries worldwide and found most companies are...
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...director require information pertaining to the finances of the firm, the key issues of the firm and the performance of the firm to formulate the strategic policies and strategies of the firm. The middle management consisting of the marketing manager, production manager etc will require information to effectively fulfill their job responsibilities and take actions accordingly. The external stakeholders such as the shareholders have invested their hard earned money in the business and would want to be informed about how well the firm is doing and the return that they will be getting for the money that they have invested. The shareholders are usually interested in the financial reports of the firm to see how profitable and liquid the firm is and will it be able to provide dividends to them. Financial reporting is necessary for management, control and accountability purposes. It helps to assess whether the resources of the firm are being utilized in the most efficient manner and the firm is meeting its objective of generating the maximum profit. Information reporting is also important for audit purpose and to present to the government or other regulatory agencies to ensure that the firm is following the general accounting standards set. Hence information plays a major role in the decision making process and should be timely, accurate and complete to ensure all issues and key performance indicators are accounted for and the right decision can be...
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...Capital Charge ECONOMIC EARNINGS = *NOPAT – (ᵝWACC X Average Invested Capital) or NOPAT – Capital Charge *Net Operating Profit after Tax ᵝ Weighted Average Cost of Capital | Green Port S/B (RM) | Sungai Emas Port S/B (RM) | MarineCorp S/B (RM) | NOPAT | 31,381,168 | 5,218,664 | 15,128,917 | Capital Charge | 45,969,400 | 187,801 | 854,306 | Economic Earnings | 31,381,168 – 45,969,400= (14,588,232) | 5,218,664 - 187,801= 5,030,563 | 15,128,917 – 854,306= 14,274,611 | Table 1 Table 1 showed that, Sungai Emas Port and MarineCorp had positive economic earnings which indicate that the value was created for the both companies. However, Green Port’s value was destroyed because of its negative economic earnings as shown in table 1. Question 2 Rank the companies in terms of their financial performance. All the companies are ranked based on three main areas in relation to their financial performance. The areas include their liquidity ratio, profitability ratio, and economic earnings. Firstly, the companies’ liquidity would be measured by current ratio. The liquidity ratio is used in order to know if the particular company has enough cash on an ongoing basis to meet its operational obligations or liabilities. A ratio less that 1 may indicate liquidity issues. A very high current ratio may mean there is excess...
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...Value Line Publishing, October 2002 1. What do the financial ratios in case Exhibit 7 tell you about the operating performance of Home Depot? What additional information do the different ratios provide? Complete and compare a similar analysis for Lowe’s. 2. How sensitive is return on capital to the forecast assumptions in case Exhibit 8? What independent changes in Carrie Galeotafiore’s estimates are required to drive the 2002 return-on-capital estimate below Home Depot’s cost-of-capital estimate of 12.3 percent? Look specifically at gross margin, cash operating expenses, receivable turnover, inventory turnover, and P&E turnover. What effect does sales growth have on return on capital? Explain your findings. 3. Do you agree with Galeotafiore’s forecast for Home Depot? How would you adjust it? 4. How would your forecast assumptions differ for Lowe’s? Complete and recommend a five-year Lowe’s forecast to Galeotafiore. 5. What do the financial ratios in case Exhibit 7 tell you about the operating performance of Home Depot? What additional information do the different ratios provide? Complete and compare a similar analysis for Lowe’s. 6. How sensitive is return on capital to the forecast assumptions in case Exhibit 8? What independent changes in Carrie Galeotafiore’s estimates are required to drive the 2002 return-on-capital estimate below Home Depot’s cost-of-capital estimate of 12.3 percent? Look specifically at gross margin, cash operating...
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...May 16, 2014 Greg O'Donnell Analyzing Financial Statements COMPARATIVE RATIO | 2002 (A) | 2003 (A) | 2004 (A) | Current=Current Assets/Current Liabilities | 104,296/139,017 RATIO= .75 | 82,058/93,975RATIO= .87 | 302,902/337,033RATIO= .90 | Long-Term Solvency=Total Assets/Total Liabilities | 391,270/310,246 RATIO= 1.26 | 359,863/259,979 RATIO= 1.38 | 699,004/338,937 RATIO= 2.06 | Contribution=Largest Revenue Source/Total Revenue | 617,169/1,165,065RATIO= .53 | 632,889/1,244,261 RATIO= .51 | 1,078,837/2,191,243 RATIO= .49 | Program/Expense =Total Program/Total Expenses | 684,008/1,185,008 RATIO= .58 | 945,579/1,316,681 RATIO= .72 | 1,526,311/1,972,131 RATIO= .77 | General and Management Expense = Total General and Management Expenses/ Total Expenses | 351,000/1,185,008 RATIO= .30 | 371,101/1,316,681 RATIO= .28 | 445,819/1,972,131 RATIO= .23 | Revenue/Expense= Total Revenues/Total Expenses | 1,165,065/1,185,008RATIO= .98 | 1,244,261/1,316,681 RATIO= .94 | 2,191,243/1,972,131 RATIO= 1.11 | After reviewing the XYZ Corporation’s financial statements of the last three fiscal years there is evidence that the organizations finances have improvement significantly in three ratio areas where the remaining ratios were fine. First problem area is the programs ratio as it had started off with violating the standard ratio with .58 percent where .60 percent is the minimum standard. The last two fiscal years...
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...that enable it to function. In this unit you learn the importance organizations place on managing their resources efficiently in order to achieve their objectives. Understanding how these resources are managed is one of the keys to assessing how well an organization is performing. The first part of this unit explores the range of human, physical and technological resources for a selected organization. You will investigate the importance of managing these resources efficiently and the contribution that recruiting and retaining suitable staff can make to the organization’s performance. The importance of managing the physical and technological resources efficiently is also explored. The level of an organization’s performance can be seen in its financial statements and the second part of this unit will develop your knowledge and understanding of them and highlight the need for the monitoring and control of costs and budgets. Scenario 1 You have obtained work experience as an assistant in a Recruitment Agency. One of the Agencies more important clients, ASDA, are wishing to change its recruitment procedures and have asked the agency for some advice. You have been asked to assist ASDA by producing material for The Human Resource department which explains the purpose of key recruitment documents and also in testing their recruitment procedures. P1 describe the recruitment documentation used in a selected organization Employing the correct...
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...Abstract Before selecting the proper financing sources Knowing the costs of financing is a prerequisite. This assignment is regarding the financing issues of business. it is very necessary to have proper knowledge over the financing terms and methods to obtain requisite financing for the organization. One has to know the costs of financing as a prerequisite before selecting the proper financing sources. In this assignment, several advantages and disadvantages are discussed for different financing methods, cost of finance, financial planning and information and many other issues that help to gain a proper knowledge about the financing in organization. Different books and journals have been used to prepare the assignment. Contents Introduction 3 Requirement 1 3 Task 1.1 : Business needs finance and available sources of finance to a business 3 Equity financing 4 Debt Financing 4 Lease Financing 4 Task 1.2 : Accessing and comparing the implication of the different sources of finance 4 Implication of equity financing 4 Implication of debt financing 4 Implication of lease financing 5 Task 1.3: evaluation of the appropriate sources of finance for the above mention businesses. 5 M1: Critically evaluate each available sources of finance to that particular firm. Evaluation should include the pros and cons, and legal aspects of each source. (Merit M1). 5 Case study 1: An engineering firm 5 Equity financing for this firm 5 Debt financing 5 Lease financing...
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...8-9 | 5. | RATIO ANALYSIS * FINANCIAL RATIOS * PROFITABILITY RATIOS * TURNOVER RATIOS | 10-1112-1617-20 | 6. | TABLE OF RATIOS | 21 | 7. | CONCLUSION | 22 | 8. | REFERENCES | 23-24 | 9. | APPENDIX | 25-26 | 10. | WORKING NOTES | 27-30 | 11. | NOTES | 31 | ABSTRACT The title of our project is HCL infosystem ltd. The purpose of this assignment is to compare the financial position of HCL between two years 2010 and 2011 by calculating different ratios from a given balance sheet and make a comparative analysis between these two years by comparing with the ideal ratio. Ratio analysis provides us an overview of the company’s financial position in both short term and long term. The ratio analysis, comparative balance sheet and common size balance sheet are gives an accurate picture of company’s position. As financial ratio analysis is a useful technique to measure, compare, and evaluate the financial condition and performance of a company and by calculating these ratios it can help us to answer if the company is business profitable and if it is able to pay its bills and to find how the business is financed and also the company’s financial performance of 2011 compared to 2010. To summarize in short in this assignment we are going to study and calculate different ratios of HCL INFOSYSTEM LTD’s balance sheet and profit & loss account of 2010 and 2011 and make a comparative analysis of these two years and to conclude its overall financial performance in 2011 compared...
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...Overview_______________________________________ | 3 | | | Financial Ratio Analysis____________________________________ | 4 | 1. Liquidity Ratios________________________________________ | 5 | 1.1 Current Ratio_______________________________________ | 5 | 1.2 Quick Ratio_________________________________________ | 6 | 1.3 Working Capital_____________________________________ | 7 | | | 2. Profitability Ratios______________________________________ | 8 | 2.1 Gross Profit Ratio____________________________________ | 8 | 2.2 Net Profit Ratio______________________________________ | 9 | 2.3 Return on Total Assets________________________________ | 10 | 2.4 Return on Capital Employed___________________________ | 11 | 2.5 Return on Equity_____________________________________ | 12 | | | 3. Activity Ratios_________________________________________ | 13 | 3.1 Debtor's Collection Period_____________________________ | 13 | 3.2 Creditor's Collection Period ___________________________ | 14 | 3.3 Stock Turnover Period________________________________ | 15 | | | 4. Solvency Ratios________________________________________ | 16 | 4.1 Gearing Ratio_______________________________________ | 16 | 4.2 Interest Cover Ratio__________________________________ | 17 | 5. Market Analysis 5.1 Earnings Per Share Ratio(EPS)_________________________ | 1818 | 5.2 Price Per Earnings Ratio(P/E)__________________________ | 19 | |...
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...on the Topic: Analyzing Performance Evaluations involves evaluating three characteristics: a Bank’s liquidity, profitability and efficiency. A short-term creditor, such as a bank, is primarily interested in liquidity---the ability of the borrower to pay obligations when they come due. The liquidity of the borrower is extremely important in evaluating the safety of a loan. A long-term creditor, such as a bondholder, looks to profitability and solvency measures that indicate the Bank’s ability to survive over a long period of time. Long-term creditors consider such measures as the amount of debt in the Bank’s capital structure and its ability to meet interest payments. Similarly, stockholders look at the profitability and solvency of the Bank. They want to assess the likelihood of dividends and the growth potential of the stock. Performance managers review and analyze the firm’s Performance Evaluations periodically, both to uncover developing problems and to assess the firm’s progress toward achieving its goal. These actions are aimed at preserving and creating value for the firm’s owner. Performance ratios enable Performance managers to monitors the pulse of the firm and its progress towards its strategic goals. Although Performance Evaluations and Performance ratios rely on accrual concepts, they can provide useful insights into important aspects of risk and return that affect share price, which management is attempting to maximize. Performance Evaluation analysis is a...
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...Financial Management in NHS Name: Course: Professor’s Name: University: City (State): Date: Sources of funding There are different sources of financing that the hospital uses to finance its operations. The hospital uses both internal and external sources to fund its operations. One of the internal sources of financing that the hospital utilizes is the revenue that is collected from the services offered to both inpatients and outpatients. The second source of internal finance that the company uses is the sale of fixed assets that are not require in the hospital. The hospital on annual basis carries out an evaluation of the assets that it no longer requires and disposes them as a way of financing its operations. The hospital further uses external methods of financing its activities. One of the main sources of finance is through the use of bank loans and overdrafts. The company seeks for both long-term and short-term loans to finance its operations. Other sources include government grants and charities from non-governmental institutions. Financial stakeholders and their various expectations Stakeholders are referred to those individuals who have an interest in the running of Moorfield’s Eye hospital. These stakeholders may commit their resources towards running of the hospital directly...
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...financial ratios of long term rivals of soft drink industry; Pepsi and Coca Cola. In order to calculate the financial position and performance of these companies various ratios for the year 2009 were calculated. These ratios includes debt ratio, liquidity ratios like current ratio, profitability indicators like return on assets, return on equity, operating performance indicators like fixed asset turnover ratio and price/earnings ratio for the investment valuation. Moreover, this paper explained list of financial ratios which can be used to measure the value given to the shareholders and their level of satisfaction and proposed guidelines to be followed when selecting any of these companies to invest in. Apart from financial ratios and performance of these two companies, this paper also discussed the non-financial elements that are important when one considers to invest in a company. DEBT MANAGEMENT OF PEPSI & COKE DEBT RATIO Debt ratio is a type of financial ratio which indicates the proportion of debt a company has to pay against its assets. If the debt ratio of a company is greater than 1 than it means it has to pay more debt than its assets. On the other hand, if the debt ratio is less than 1 then the company is better able to pay its debts. It determines to the investors the level of risk involved in doing business with company (investopedia). The debt ratio of Pepsi Co., for the year 2009, is 0.33 which is higher than the debt ratio of Coca Cola...
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