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financl analysis of dareen company
Finance & Accounting
Pages 8 (2008 words)
RATIO ANALYSIS INTRODUCTION This report is aimed at analyzing the financial performance of Dareen Merchandizing. Analysis will be conducted using financial ratios and these ratios will be compared over the period of two years. Performance analysis will also be conducted based on the comparison of company performance with industry performance and trend.
Comparison using ratios over two financial years of Dareen Merchandizing and with industry would provide considerable insight regarding Dareen Merchandizing business performance. 1- PROFIT MARGIN FORMULA = NET INCOME SALES (McLaney, 2009) A- RATIO: Ratio DM 2011 Industry 2011 DM 2010 Industry 2010 PROFIT MARGIN =219,030/815000 26.87% 26.00% =136,990/645,000 21.24% 22.00% B- COMMENT ON COMPANY PERFORMANCE AND INDUSTRY TREND 2011- PM-Favorable over industry 2010- PM- Favorable over industry Profit margin in the year 2011 has increased as compared to year 2010. Main reason driving this increase appears to increase in prices as well as sales of the product. Income statement shows sales increased from AED 645,000 in year 2010 to AED 815,000 in year 2011. Increase in price is also clued from comparatively minimal increase in cost goods sold than increase in sales. Increase in sales can be attributed to heavy advertising expenditure incurred from AED 2200 in year 2010 to AED 25000 in 2011. ...
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