CMGT/577- CIS Business Financial Management.
Before beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This document will use a variety of these ratios to analyze the firm, Sample Company, as of December 31,2000.
Financial Statement Ratios.
Profitability Ratios.
The ratios returns on investment (ROI) and return on equity (ROE) are two of the most popular measure of profitability of a company and, along with the P/E ratio, have the most significant value of any of the ratios. The DuPont Model expands on the ROI calculation by inserting sales and it's relationship to the companies" generation of profits and utilization of assets into the calculation. Additional profitability ratios include the price earnings ratio (P/E), the dividend payout and the dividend yield. The price earnings ratio helps to indicate to investor how expensive the shares of common stock of a firm are. Dividend yield is part of the stockholders ROI and is represented by the annual cash dividend. Dividend yields have historically been between 3% to 6% for common stock and 5% to 8% for preferred stock. Dividend payout ratio shows the proportion of the earnings paid to common shareholders. Dividend payout for manufacturing companies range from 30% to 50%, but can vary widely. .
Dupont Analysis (ROI) - Return on Investment .
The return on Investment (ROI) is important because it describes the rate of return the company was able to make on its assets. The ROI, use net income or operating income, as amount of return and average total assets as the amount invested.
Ratio Analysis Ratio Analysis is the process of determining and presenting the relationship of items and group of items in the statements. ... Ratio Analysis Ratio is an expression of relationship between two values. ... Objectives of Ratio Analysis 1. ... Ratio analysis facilitates inter firm comparison. Advantages/Importance of Ratio Analysis 1. ...
Financial Statement Analysis Project The two companies that I will be comparing in this project are McDonalds and Wendy's. ... Current Ratio To calculate the current ratio, which is one of the most popular liquidity ratios you divide all of firm's current assets by all of its current liabilities. ... In 2001 Wendy's had a quick ratio of .66 while McDonalds came through with a quick ratio of .76. ... P/E Ratio The price-to-earnings ratio is calculated by taking the stock's market price per to its earnings per share. ... With these simple and appropriate rat...
Assess the condition of the company using ratio analysis, including key ratios and a Dupont analysis. ... First, ratio analysis will be conducted on profitability, activity, leverage, market price and dividend payout using the financial statements from years1999, 2000 and 2001. ... Stock, Price to earning (P/E) ratio is ratio used to evaluate the cost of a company's stock price. ... P/E ratio is 13.1 for 2001 and 10.7 for 2000. ... The analysis of the financial statements from Sample Co. brings many questions. ...
Financial analysis for Telus 2000-2001 Earnings per Share of Common Stock for Telus Used to measure the profit margin of a company's common stock, this method was used to analyze Telus corporation's earnings per share of common stock. ... Telus" Current Ratio for 2000-2001 Current ratio is used to show the short term liquidity of a company, how easily a company can cover for their liabilities, by comparing their total assets to there total liabilities. A company with a stable flow of incoming and out coming cash should have a current asset to current liability ratio of 2:1. ...
With the use of a ratio analysis can be determined using aspects of the liquidity, profitability, and solvency with the use of this data. ... With the use of ratio analysis liquidity, profitability, and solvency can be calculated. ... Liquidity ratio, or current ratio, is an emergency debt ratio, showing if the company is capable of covering their debts if things are not going correctly. ... HorIzontal analysis: Current assets in 2005 / current assets in 2004 (31,727-27987)/27987=13.4% Current liabilities 2005/current liabilities 2004 (17,476-14,464)/14,464=20.8% Coca Cola: Horizontal anal...
Many of businesses have gone bankrupt because of cash flow problems in particular liquidity, therefore the term of current ratio and liquid ratio are used to compare the abilities to pay short term (current) debt between two different companies. ... Item Company Name Aristocrat ($K) Ainsworth ($K) Current ratio 1.77:1 5.64:1 Inventories/current asset 1/3 1/2 Quick ratio 1.2:1 2.8: 1 Furthermore, the quick ratio is simply current assets minus inventories divided by current liabilities. ... The quick ratio can also vary by industry. ... The following is the summary of ratios relevant to c...
We are going to take many different ratios and apply them to financial analysis of the company, Amazon. ... This acid-test ratio uses a narrower base to measure liquidity than the current ratio does. ... This ratio refers to profitability. ... To conclude with our financial statement analysis of the company, Amazon. ... The analysis of this Amazing project has given me the skills to know how to measure progress and fixation of a company's cash flow. ...
Liquidity Current Ratio: With a current ratio of 1.93 : 1, HBC would qualify as a good credit risk to creditors. ... Under the quick ratio, HBC is shown to be considerably less liquid than originally portrayed in the current ratio. ... Solvency Debt Ratio: From the view of creditors, HBC's debt ratio of 47% is fairly high. ... Price Earnings Ratio: The price earnings ratio for HBC is 16.47. ... HBC has a slightly higher current ratio while Canadian Tire has a slightly higher quick ratio. ...
