StudentShare solutions
Triangle menu

Financial Ratio Analysis Report - Essay Example

Extract of sample
Financial Ratio Analysis Report

Analysis and interpretation of financial statements helps to evaluate the financial position and performance of an enterprise. "GM generated record third quarter automotive revenue of $43.1 billion. The company also achieved record global third quarter sales of 2.39 million cars and trucks, up four percent compared to the third quarter 2006, driven by exceptionally strong demand in emerging markets and improved performance in developed markets. GM also set a number of third quarter sales records around the globe, including a 22 percent increase in GMLAAM, 16 percent increase in the GMAP region, and 15 percent gain in GME." (GM Reports third quarter financial results, 2007). Analysis of Fundamental Ratios and Trends
Ratio analysis is one of the important tools used to develop and interpret the financial statements of a business entity. Ratios measure the efficiency of operation of a business unit. Moreover, it also helps to analyze the financial strength or weakness of a business entity. The economic growth of the company is steady and stable. Like all other areas, the company is highly concentrating in the area of accounting and finance also. Similarly, a well defined plan is maintained by the company for protecting its quantum of stock:-
Ge1. Maintain control over the entire amount of raw material obtained from the suppliers.
2. Utilize these quantum of raw materials for the production of goods with appropriate control and without making any wastage.
3. After making the delivery of finished goods, company tries to restore the balance of material/ inventory for further process.
General Motors, a leading automobile manufacturer is following a systematic procedure for evaluating the financial performance of the entity. The major ratios are being calculated by GM for the analysis and interpretation of financial measurement are current ratio, quick ratio, asset turn over ratio, inventory turn over ratio etc. Therefore, the fundamental accounting ratios of GM are depicted below-
Estimated Financial Ratios of General Motors
a. . Liquidity Ratios:
1. Current Ratio = Current Assets = $1,000
Current Liabilities$310= 3.2 times.
2) Quick ratio= Quick Assets/ Current liabilities= $385/ $310 = 1.2 times.
b) Leverage Ratios-
1) Debt ratio= Total Debt/ Total Assets=$1,064/$2,000= 53.2%
2) Debt to Net worth ratio= Total Debt/ Tangible Net Worth= $1,064/$2250= 47.29%.
c) Operating ratios-
1) Net sales to Total Assets= Net Sales/ Total Assets=$3,000/$2,000= 1.5 times.
2) Gross profit ratio= Gross profit/ sales= 1,500/3,000= 50%
d) Profitability ratios:
1) Basic Earning Power-(BEP) = EBIT/Total Assets= $283.8/ $2,000= 14.2%
2) Return On Total Assets (ROA) = Net income to stock holders/ Total Assets= $113.5/ $2,000= 5.7%
3) Price Earning Ratio (PE) = Price per share/ Earnings per share= $23/2.27= 10.1 times.
4) Market ratio= Common Equity/ Shares out standing= $896/ 50= $17.92
5) Return On Common Equity (ROE) = Net income to ...Show more

Summary

General Motors, one of the leading auto company in the world, especially in the field of production and sales aspects. Due to the development of the business of GM (General Motors) the economy of the country also got developed. For the purpose of evaluating the financial performance of the company, it is crucial to analyze various annual reports and financial statements periodically.
Author : karsonzemlak
Financial Ratio Analysis Report essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Financial Ratio Analysis Report"
with a personal 20% discount.
Grab the best paper

Related Essays

FINANCIAL RATIO ANALYSIS OF TESCO PLC
Introduction Started as a small market stall in London’s East End in 1919 by Jack Cohen, today, Tesco Plc is the globe’s third largest supermarket with business operations spanning across 14 nations thereby serving millions of customers every week and offering jobs to more than 520,000 peoples around the world.
12 pages (3000 words) Essay
Financial Ratio Analysis: Diageo PLC

The author states that Diageo is a worldwide company, by means of its products delivering in about 150 markets around the globe. Diageo positioned itself as a premium brand but its positioning is not perfect. It should still promote its products as a premium products as well as it should maintain its brand loyalty so it can face intense rivalry.

15 pages (3750 words) Essay
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
Financial analysis report
3 pages (750 words) Essay
Ratio Analysis
Financial statements are the major means through which firms present their financial situation to stockholders, creditors, and the general public. The majority of firms include extensive financial statements in their annual reports, which receive wide distribution.
11 pages (2750 words) Essay
Financial analysis report
Price/Book Value Ratio: This ratio should be lower for better value but Microsoft’s price/book ratio is greater than the industry. Therefore, market places less value to the book value of the company.
3 pages (750 words) Essay
Financial ratio analysis FOR Mondi company
Mondi compares favourably against James Cropper plc, another paper and packaging company listed in the LSE and which is its closest competitor among the exchange listings. While Mondi may appear to be less liquid than Cropper, it shows stronger activity turnover
10 pages (2500 words) Essay
Ratio Analysis
The paper uses Profitability, efficiency, liquidity and shareholder ratios as the basic tools. The more complex tools like IRR, WACC etc
6 pages (1500 words) Essay
Financial statements ratio analysis
Accounts receivable turnover shows the number of times a company collects its receivables in an operating cycle. The company has a relatively high turnover however it decreased in 2013 from around six times to four times. This shows that its frequency reduced. Fixed asset
4 pages (1000 words) Essay
Financial ratio analysis
However, it offers the customers quality food at a reasonable price. The total market share of the company is about 16%. It also aims at selling more than 30,000 products (J Sainsbury Plc., 2015b). The home delivery facility is availed by 93% of the households in the UK
6 pages (1500 words) Essay
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
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation