Ratio analysis is done to compare the performance of FHL with its major competitor, Harvey Norman. Profitability, Asset efficiency, Liquidity, Capital structure, and Market performance ratios are calculated for both the companies and performance of the two companies is analyzed in the light of these ratios. Some of the limitations of the analysis are identified, conclusions are drawn and recommendations are given on the basis of the analysis done on FHL.
Financial statements include at least two accounting statements that are prepared by a company at the end of its accounting period. These two include Income statement and balance sheet and these statements of Fantastic Holdings LTD (FHL) are analyzed in this report.
Financial statement analysis of a company is extremely important for a company so that it can reflect upon performance of the company and can add meaning to the figures of the financial statements. Financial statement analysis involves evaluating three characteristics: profitability, liquidity and solvency. A short term lender will be interested in the liquidity of the company which measures the efficiency of the companies to pay their obligations when they are due. A long term creditor would assess the profitability and solvency of the company which measures the long term standing of the company. Hence financial statement analysis is extremely important for the company as well as for the users of the financial statements.
Comparisons can be made on the intra company basis, industry averages and inter company basis. Vertical analysis is done to make intra company comparisons and ratio analysis is done to make inter company comparisons. In this report, both comparisons are made. Intra company analysis is done using vertical and trend analysis and inter company analysis is done through ratio analysis of Fantastic Holdings Ltd and Harvey Norman Holdings Ltd. Through the analysis, conclusions will be drawn regarding the performance of FHL from