Ratio Analysis Essay - 996 Words

Financial Ratios: What They MeanIn assessing the significance of various financial data, managers often engage in ratio analysis, the process of determining and evaluating financial ratios. A financial ratio is a relationship that indicates something about a companys activities, such as the ratio between the companys current assets and current liabilities or between its accounts receivable and its annual sales. The basic source for these ratios is the companys financial statements that contain figures on assets, liabilities, profits, and losses. Ratios are only meaningful when compared with other information. Since they are often compared with industry data, ratios help managers understand their companys performance relative to that of†¦show more content†¦These averages are developed by statistical services and trade associations and are updated annually. Some of these sources will be covered later in this guide.Financial ratios can also give mixed signals about a companys financial health, and can vary significantly among companies, industries, and over time. Other factors should also be considered such as a companys products, management, competitors, and vision for the future.There are many different ratios and models used today to analyze companies. The most common is the price earnings (P/E) ratio. It is published daily with the transactions of the New York Stock Exchange, American Stock Exchange, and NASDAQ. These quotations show not only the most recent price but also the highest and lowest price paid for the stock during the previous fifty-two weeks, the annual dividend, the dividend yield, the price/earnings ratio, the days trading volume, high and low prices for the day, the changes from the previous days closing price. The price to earnings (P/E) ratio is calculated by dividing the current market price per share by current earnings per share. It represents a multiplier applied to current earnings to determine the value of a share of the stoc k in the market. The price-earnings ratio is influenced by the earnings and sales growth of the company, the risk (or volatility in performance), the debt-equity structure of the company, the dividend policy, theShow MoreRelatedRatio Analysis1885 Words   |  8 Pages Ratio Analysis University of Phoenix HCS/571 Finance Resource Management Sept 24, 2013Rosetta Stringfellow, MBA, BSRatio Analysis Ratio analysis is a widely used managerial tool that compares one number with another to gain insights that would not arise from looking at either of the numbers separately. Ratio analysis is used to examine and interpret the relationship between two numbers on a financial statement. This is done so that the managersRead MoreThe Analysis And Ratio Analysis1012 Words   |  5 Pagesthis paper adopts the document analysis and ratio analysis. The information regarding the board characteristics and the financial figures collect from annual reports which are published on the official website of target companies. The paper further analyses the statistics of each board in terms of the age, education level, gender of directors, board size and the proportion of executive and independent non-executive directors. Moreover, this paper uses the financial ratio of the target companies as theirRead Mor eRatio Analysis Paper1127 Words   |  5 PagesRatio Analysis Paper Ratios describe the various relationships among accounts in the balance sheet and income statement. Financial ratios are important and helpful gauges of how an organization is functioning. An organization’s financial health, potential revenue, and even possible bankruptcy can be garnered from financial ratios. 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Region contribution towards total growth rate Hays plc overall market has been stable with a decrease in net fee income by -1%, however, weakening activities in the mining sector of Australia and new Zealand led to a step down in net fee incomeRead MoreFinancial Ratio Analysis : Financial Ratios Analysis1634 Words   |  7 Pages ASSIGNMENT: FINANCIAL RATIO ANALYSIS UHCL Honesty Code â€Å"I will be honest in all my academic activities and will not tolerate dishonesty.† Uday Sekhar Reddy Mareddy Student ID: 1409342 Ratios 2015 2014 2013 Benchmark Beds in servicesRead MoreRatio Analysis Report1744 Words   |  7 Pagesyears. The report entails a financial analysis and summaries, which will give the executive board an understanding of how well the current managing director is performing, and whether his contract should be renewed. Figures were obtained from comparative balance sheets and profit and loss statements from the relevant years as well as additional information that was forwarded by the board. This information enabled the development of percentage and ratio analysis (see appendices), which was then usedRead MoreRatio Analysis2134 Words   |  9 PagesRatio Analysis Ratio analysis is used to evaluate relationships among financial statement items. The ratios are used to identify trends over time for one company or to compare two or more companies at one point in time. Financial statement ratio analysis focuses on three key aspects of a business: liquidity, profitability, and solvency. Liquidity ratios Liquidity ratios measure the ability of a company to repay its short-term debts and meet unexpected cash needs. Current ratio. The currentRead More Ratio Analysis Essay679 Words   |  3 Pagesbetter known as ratio analysis. Ratios are among the more widely used tools of financial analysis because they provide clues to and symptoms of underlying conditions.2 Ratios help measure a company’s liquidity, activity, profitability, leverage and coverage.1 These five measured sections show how ratio analysis is used in decision-making, how a firm can measure its financial situation and financial performance, and the strengths and weaknesses of the company. The term ratio analysis can be broken down