Ratio Analysis - Essay Example

Only on StudentShare

Extract of sample
Ratio Analysis

Suppose we want to assess the financial health of a very large or small firm, how can we analyze the firm so our analysis can provide an insight into the basic prospects for profitability of a firm? Is the firm losing or is it profitable? Are there prospects for making the firm profitable? Is the firm worth buying? Should we sell the firm? If we are to sell the firm, at what price should our purchase price be? How large are the firm’s debts? What are its prospects for profitability? What is the firm’s net worth? These are some of the questions in which ratio analysis can help provide an answer. Gibson (1982, p. 18) pointed out that the financial “ratios can be grouped into four categories: liquidity, debt, profitability, and other” financial ratios. The liquidity ratios include the working capital ratio, and the current ratio (Gibson 1982, pp. 18-19). Some of the broad debt ratios include the debt-to-capital and the debt-to-equity ratios. The debt-to-capital ratios used by many firms include the long term debt-to-long term debt plus stockholders’ equity, short term debt plus long-term debt-to-short term debt plus long-term debt plus stockholders’ equity, and several other ratios (Gibson 1982, p. 22). ...Show more

Summary

On Ratio Analysis Ratios analysis is a set of techniques used to assess the financial ratios of a firm pertaining to liquidity, debt, and profitability (Gibson 1982). The analysis focuses on the interpretation of indicators or tools or financial ratios through which an analyst can evaluate the investment worthiness of a firm (Gibson 1982)…
Author : royrunolfsdotti
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Ratio Analysis"
with a personal 20% discount.
Grab the best paper

Related Essays

Managing Finance: Financial ratio analysis
The first two sections of the paper focuses on analyzing the financial soundness of Barney Bakes plc as well discuss some the management practices that should be adopted to enhance the profitability of the organization. This includes beyond budgeting and corporate governance.
15 pages (3750 words) Coursework
Ratio Analysis
Entertainment is a key area which has been targeted by several leading companies; apple is a classic example of one such company. Ipods have become a daily necessity for several people, Ipads have been selling like hot cakes and there are others products that are being manufactured by Apple which are doing reasonably well in the market.
4 pages (1000 words) Case Study
Ratio Analysis
Financial reports are analyzed through complex tools like a closer look at the operational side or a rather simplistic approach comprising ratio analysis. This paper, however, aims at analyzing and assessing the financial performance of Go ahead Group Plc with the industry and its prior period annual reports using ratio analysis.
6 pages (1500 words) Essay
Innovation Policy
International trade is another important factor that has received significant impact from the technological changes. One of the impacts on international trade from technological changes has been the determination of importer and exporter positions. Countries with dominance in technological advancements have taken the position of becoming importers.
10 pages (2500 words) Essay
Ratio Analysis
3 pages (750 words) Math Problem
Ratio Analysis
The investors and customers of the company will use the information in rating the company’s performance over the last previous years. This will help management in knowing their strengths and weaknesses and will adopt mechanisms to take advantage of the opportunities and minimize the threats that may exist.
6 pages (1500 words) Coursework
Ratio Analysis
The study has provided insight analysis financial ratios of ASOS Company. Whereby, a comparison of financial results for the two years was executed. It can be observed that the financial performance of ASOS Company was higher in 2013 than 2012 based on the financial statements and ratios computed below.
6 pages (1500 words) Coursework
Accounting and Audit Enforcement
The SOX act of 2002, an abbreviation of Sarbanes-Oxley Act, is an accountancy law that set new laws and enhanced standards for all public company boards within the United States, its management, as well as the firms in public accountancy.
5 pages (1250 words) Research Paper
Ratio analysis
The comparison would be within a firm between two financial periods like in our case where we want to analyze Apple Incorporation’s financial statements for two financial periods. Secondly, the comparison could be between firms operating within the same industry.
10 pages (2500 words) Essay
ASC 2
According to the ASC guidelines, an entity should report the gross or net earnings from its transactions depends on whether it is acting in the capacity of a principal seller or as an agent. The
2 pages (500 words) Essay
Auditing- report of the real good food
In addition, the four accounts are accompanied by other notes such the auditor’s report, the director’s report, etc. On that note, the assignment presents analyses of the financial statement of Real Good Food PLC with respect to the
6 pages (1500 words) Assignment
Discussion Question
The inventory floor requires that the inventory should be reported with value less than the realizable value with an addition of normally attainable profit. An example of the application of lower cost method is the recording or reporting of imports in an
1 pages (250 words) Coursework
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT