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The financial ratios of Rolls Royce and its major competitors - Essay Example

Author : silas04
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This paper examines the performance of Rolls Royce over the several years. For this regard, key financial ratios have been calculated for Rolls Royce. In order to evaluate the performance of the company, the ratios have been compared with its major competitors and Industry Standards…

Extract of sample
The financial ratios of Rolls Royce and its major competitors

According to the research findings every business, no matter small or large, constantly evaluates its company’s performance by comparing it with competitors, industry and its own past performance. In order to do so, businesses not only look at the figures of sales, profit and costs but also prepare other criterion for measuring performance which helps in reading between the lines of financial statements. The most widely known and reliable approach of evaluating a firm’s performance is by calculating and comparing its financial ratios. The basic reason for doing so is because this information is understandable for every person who has some level of knowledge of financial concepts. By comparing the ratios with the competitor of the firm or with its past performance, a clear idea can be obtained. For this purpose, the company which has been chosen is Roll Royce. It is a diversified company having its operations in the field of aerospace, nuclear market, civil defense and marine and energy. It was founded in 1971 and has its headquarters in London, United Kingdom. Activity Ratio also called as Liquidity Ratio helps a firm in determining the ability of a firm to meet its current liabilities. Activity Ratio is that investment or cash which is used to pay off the short term debts as well as expenses. Current Ratio is determines whether the firm has enough liquidity to pay off its expenses and short term debt. Theoretically, if current ratio is around 2.00 then it is considered as the most preferable. ...
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