Financial Reporting and Analysis - Assignment Example

2) Non-cash items usually include those items which do not include the transfer of money. The most feasible way for adjusting non-cash items is by adding the same form the net income of the firm (Hung, 2000). 3) The stock market participants were able to predict the fall in the revenues of Charter. As a result the company’s stock prices began being priced low by the stock market forces. A low price allocates a low level of dividend (Berk & DeMarzo, 2013). A low share price allocation also helps a firm to attract a large number of small investor (Rioja & Valev, 2004).

However a declining share price also indicates a firm’s low revenue which also repels a number of investors who expect growth and rising dividends (Chandra, 2005). The financial performance of airlines industry is generally analyzed on the basis of return on equity (ROE) or return on assets (ROA). The airline industry is immensely capital intensive and profitability is usually measured on the basis of returns available on equity or assets. Accordingly it is seen that the ROA for the airlines industry on an average is around 9.8. From the given data it is seen that firm 6 incurs a ROA ratio of 9.95. Hence this firm belongs to the airlines industry.

Banking firms puts special emphasis upon the returns from operations. Hence net margin is usually one of the critical parameters for judging the efficiency of the firms in this sector. The banking industry usually incurs a net profit margin of 16. From the given data set, it is seen that firm 9 has a net profit margin of 12.82. Most brewery firms analyze their financial effectively by analyzing the gross margin ratio. Breweries usually have a gross profit margin of 60. From the given data it can therefore be analyzed that firm 8 has a gross profit of 60.21. Hence firm 8 belongs to brewery industry.

Departmental stores usually experience a very high level of liquidity and hence