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Case Study: Financial Analysis

The document analyzes financial ratios for a company from 1995 to 2000. It discusses liquidity ratios that measure the company's ability to pay short-term debts, activity ratios that indicate operational efficiency, a leverage ratio that shows debt capacity, and profitability ratios that reveal how profitable the company is. The document concludes that while ratios are useful for identifying issues, they do not offer solutions.

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abraam
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60 views1 page

Case Study: Financial Analysis

The document analyzes financial ratios for a company from 1995 to 2000. It discusses liquidity ratios that measure the company's ability to pay short-term debts, activity ratios that indicate operational efficiency, a leverage ratio that shows debt capacity, and profitability ratios that reveal how profitable the company is. The document concludes that while ratios are useful for identifying issues, they do not offer solutions.

Uploaded by

abraam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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Financial Analysis

Case Study

Year 1995 Year 1996 Year 1997 Year 1998 Year 1999 Year 2000
1 The Liquidity ratios :

* Current ratio = Current assets #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Current Liabilities

* Quick ratio = Current assets - Inv. #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Current Liabilities

The Liquidity ratios shows the ability of the Co. to cover its short term liabilities

2 The Activity ratios :

* Inventory turnover = Sales #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!


Inventory

* F.A. turnover = Sales #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!


net F.A.

* Total Assets turnover = Sales #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Total assets

In general the Activity ratios gives a better indication of the Co. situation year on year

3 The Leverage ratio :

* Indebtedness ratio = Total Lib. #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Total Equity

Shows the companies dept capacity and financial resources

4 The Profitability ratios :

* Profit margin over sales = Net Income #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Sales

* Return on total assets = Net Income #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Total assets

* Return on equity = Net Income #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Comm. Equity

Shows how profitable the firm is

General Comment
Ratios are useful, they give you guidelines to identify the problem, but never offer you the solution

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