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Analyze and Compare Ratios of West Ham - Essay Example

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Analyze and Compare Ratios of West Ham

It has increased far more in 2011 from 2010 than that of in 2010 from 2009. But the reported percentage is not at all a good indicator of asset performance (NYU, 2012). Debt ratios Debt ratios determine the company’s over debt load an also mix of equity and debt. So these ratios evaluate the financial risk the company and its shareholders have been facing. Debt ratio is a compared unit of company’s total debt with respect to its total assets. Specifically it shows the amount of leverage the company is using. Higher debt ratio means the company is highly dependent on its leverage and the equity position of the company is very weak. So higher the ratio means more risk the company and its shareholder has been taking. Although the total liabilities of the company has been increasing over the year but the total assets also has been decreasing in similar proportion. As a result the ratio has increased more in 2011 than it decreased in 2010 from 2009. Debt equity ratio represents the overall status of debt of the company. It compares the total liability of the company with respect to the shareholders fund. ...
The company improved a lot in terms of shareholder’s equity in 2010 than that of 2009 as it reported the shareholder’s amount of ?13,063,000 from tremendous growth from -?290,000 in 2009. But in 2011 again it has come down to huge deficit of its shareholders’ fund. So, due to the deficit of the shareholders’’ equity in two alternative years except 2010 with respect to huge liability of the company, the shares of the company have become worthless. The main reason behind this the company is highly depended on its creditors which adversely affects the interest of investors or the shareholders towards this company. Interest coverage ratio is an indicator that determines the how easily the company can pay its interest on the basis of its gross earnings before paying interest and tax. Higher the ratio means the company’s gross earning is very high and it can easily pay the interest of its outstanding debt. This company has been reporting negative gross income i.e. loss before paying tax and interest. So has been able to pay interest expense of its outstanding debt and these have remained due or payable for the company (JMU, 2010). Liquidity ratios Current ratio represents the working capital position of the company as it is one of the important indicators of liquidity of a company. It measures the performance of the company regarding its short term ability to pay the short term liabilities of the company. The3 current ratio of the company is has been lower than 1 in all the tree consecutive years that means it has not been able to pay its liabilities as has remained lower than liabilities. Quick ratio or acid test ratio indicates that the company has enough short term ...Show more

Summary

Ratio Analysis Table of Content Ratio analysis of company’s (West Ham) won ratios 3 Activity ratios 3 Debt ratios 3 Liquidity ratios 4 Profitability ratios 5 Financial statement ratios 5 Comparative ratio analysis of West Hum with its competitors 5 Activity ratios 5 Debt ratios 6 Liquidity ratios 6 Profitability and financial statement ratios 6 Reference 7 Ratio analysis of company’s (West Ham) won ratios Activity ratios Asser turnover ratio represents the net sales with respect to the total assets of the company…
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