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GlaxoSmithKline Plc and J Sainbury Plc: Accounting for Limited Companies
Finance & Accounting
Pages 8 (2008 words)
In order to compare two public companies a financial analyst must evaluate the financial results of each firm. There are thousands of companies listed in the London Stock Exchange…
There a several techniques that can be used to evaluate the performance of a firm, but one of the most popular and effective techniques is the use of ratio analysis. Ratio analysis is relative simple to apply for any person if they know the formulas for the different financial ratios. The use of ratio analysis does have its limitations because it does not consider other qualitative factors that may affect the financial results of a company such as a pending lawsuit. This report is going to compare two public companies based in the United Kingdom. Ratio analysis is going to be the primary tool to compare the financial results of both companies. The two companies that are going to be compared are GlaxoSmithKline Plc and J Sainbury Plc. An inherent limitation of the use of ratio analysis to compare the results of these two companies is that the two companies participate in different industries. Different industries on many occasions have different expectations and industry standards, thus a ratio that might seem bad for a company might actually be good in comparison with the results of similar companies that participate in the same industry. ...
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