...Financial Ratio Comparison of Tesco Plc and Sainsbury Plc Introduction Abraham Brilloff once said, “Financial statements are like a fine perfume-to be sniffed but not swallowed.” This means to make rational decisions in keeping with objectives of the firm by busing the financial statements (Helfert, 2003), it is important to critical and analytical sniff but to simply swallow the statistical information from the statements. Using what tools to get into the deep sight of financial statement and see the beautiful sight of the financial world is what the essay focuses about (Matsumoto, Melkote & James, 1995). This essay centers on demonstrating and understanding of the purpose of financial ratios analysis, applying a range of financial accounting ratios to analyze and interpret financial statements and trend analysis of financial statements, using these ratios to critically evaluate the comparable companies’ performance and critically propose constructive suggestion to the discussed companies. And this essay selects Tesco Plc and Sainsbury Plc as a set of basement to analyze financial ratios of the companies’ financial statements. Tesco Plc and J. Sainsbury Plc are the comparable companies. Tesco Plc, whose headquarters are in UK, is one of the world's largest retailers with operations in 14 countries. Tesco Plc operates not only store mainly offering food, general merchandise, clothing, and electrical products, but also finance service, such as retail banking, financial, and...
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...2006, 2007 and 2008 to analyze the ratios, and conduct a DuPont analysis to find the competitive position and the level of performance of both the organizations in respect to the calculated ratios. In addition we have done index analysis of both balance sheet and income statement to find the position of the organizations in respect of profitability. The organizations are pharmaceutical companies. The reason behind calculating the ratios of different years of a company gives us a complete view about company’s gradual improvement or decline. The chosen company has gained significant popularity in the market of Bangladesh and has been running the business for a considerable period. The report consists of five types of ratio analysis which are as follows: 1. Liquidity Ratio 2. Financial Leverage Ratios 3. Interest Coverage Ratio 4. Activity ratios 5. Profitability Ratios Under these primary categories there are several other sub categories. I calculated those ratios and provided interpretation of the results and also evaluated the company’s position in terms of their results. Last but not the least we did the index analysis of the balance sheet and income statement. We found some problems in the financial activities of the company and provided recommendations based on that. 2. Introduction Ratio analysis is a numerical attempt to analyze the performance and financial position of a business. By converting absolute numbers into ratios, we can compare between one firm and...
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...COMPETITOR ANALYSIS Exxon Mobil’s leading competitors are Royal Dutch Shell, British Petroleum, Chevron and ConocoPhillips. 1. Royal Dutch Shell: (Shell) is an independent oil and gas company. Shell is engaged worldwide in the principal aspects of the oil and gas industry and also has interest in chemicals and other energy-related businesses. Similar to Exxon Mobil, Shell operates in three different segments: Upstream, Downstream and Corporate. 2. British Petroleum: (BP) is an international oil and gas company. BP operates its products in more than 80 countries, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemical products. The company operates in two segments: Exploration & Production and Refining & Marketing. 3. Chevron: Chevron Corporation manages its investments in subsidiaries and affiliates and provides administrative, financial, management and technology support to the United States and international subsidiaries the engage in petroleum operations, chemical operation, mining operations, power generation and energy services. 4. ConocoPhillips: ConocoPhillips is an international, integrated energy company. The company operates in six segments: Exploration & Production, Midstream, Refining & Marketing, Investments, Chemicals, and Emerging Businesses. Competitor 2011 Revenue Comparison In terms of revenue, ExxonMobil is the leader followed by Shell, BP, Chevron, and Conoco. Competitor 2011...
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...PROJECT 2 FINANCIAL RATIO ANALYSIS: 2 Purposes and considerations of ratio analysis 2 PHARMACEUTICAL INDUSTRY IN PAKISTAN 3 FEROZSONS LABORATORIES LIMITED 4 LIQUIDITY ANALYSIS RATIOS 4 Current Ratio: 4 Quick Ratio 5 Working Capital: 6 Absolute Liquid Ratio: 8 SOLVENCY RATIOS (Capital Structure Analysis Ratios) 9 Debt Ratio 9 Debt to Equity Ratio 9 Interest Coverage Ratio 10 Equity Ratio 12 Assets to Equity Ratios 13 PROFITABILITY ANALYSIS RATIOS: 14 GENERAL PROFITABILITY: 14 Gross profit ratio/ margin: 15 Operating Expense Ratio: 16 Operating Profit Margin: 17 Net Profit Ratio: 18 OVERALL PROFITABILITY: 19 Earnings per Share (EPS): 19 Return on Equity (ROE): 20 Return on Assets (ROA): 21 Return on Capital Employed: 22 ACTIVITY ANALYSIS RATIOS 23 Operating Cycle 27 Assets Turnover Ratio 30 Working Capital Turnover Ratio 31 CAPITAL MARKET ANALYSIS RATIOS 32 Price earnings ratio(PE): 32 Dividend Yield Ratio 34 Market to Book Ratio 35 Dividend Payout Ratio 36 STATIC ANALYSIS: 37 REFERENCES: 44 INTRODUCTION TO THE PROJECT The project covers the trend analysis of Ferozsons, a pharmaceutical company in Pakistan, and the static analysis of the same with its major rival, Glaxo Smith Kline Pakistan Limited FINANCIAL RATIO ANALYSIS: The financial statements are essential but they are only the starting point for successful financial management. Financial Ratio Analysis is applied to Financial Statements...
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...a.) Ratios are useful indicators of a firm's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms in the same industry. Managers use ratio analysis to identify situations needing attention; potential leaders use financial analysis to determine whether a company is creditworthy; and stockholders use ratio analysis to help predict future earnings, dividends, and free cash flow. b.) The 2011 current ratio is calculated by using the following formula: current assets/current liabilities= 2,680,112/1,039,800= 2.58:1 The 2011 quick ratio is calculated by using the following formula: current assets-inventories/current liabilities=2,680,112-1,716,480/1,039,800=.93:1 The higher the current ratio the better the company’s liquidity because it provides insight about a firm's ability to meet its short-term financial obligations; therefore after calculating the 2009, 2010, and projected 2011 current ratio using the current assets/current liabilities formula we find the following ratios: 2009: 1,124,000/481,600=2.33:1 2010: 1,946,802/1,328,960=1.46:1 projected 2011: 2,680,112/1,039,800=2.58:1 The projected 2011 balance sheet leads us to believe that the year 2011 will have more liquidity than in the previous 2 years. Ratios are very useful to managers, bankers and stockholders for various reasons...
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...Objective: Ratio analysis expresses the relationship among selected items of financial statement data. A ratio expresses the mathematical relationship between one quantity and another. The relationship is expressed in terms of a percentage, a rate or a simple proportion. Ratios can provide clues to underlying that may not be apparent from individual financial statement component. However, a single ratio by itself is not very meaningful. For discussion making the companies use the following types of comparisons. a. Intra-company comparisons b. Industry average comparisons c. Intercompany comparisons Methodology: For our report we have collected the financial reports of the following companies (for the year 2009 and 2010): 1. Apex Tannery 2. Monno Ceramic 3. Bata Shoe 4. Meghna Cement & 5. Fu-wang Food We have calculated the following ratios for the each of the companies for both years: 1. Current ratio 2. Quick ratio 3. Inventory turnover ratio 4. Long term debt ratio 5. Debt to total asset ratio 6. Total asset turnover 7. Times interest earned ratio We have found the average value of each of the ratios for the organizations. We made intercompany comparison based on the average value of these ratios to identify the best and the worst company. In the end we tried to identify the reasons which caused the best and the worst companies to have those ratios. Description of the Ratios: 1. Liquidity...
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...2005-2006 FALL SEMESTER Financial Ratio Analysis Content Introduction………………………………………p.3 Overview of AT&T………………………………p.4 Overview of China Mobile (HK) Ltd…………….p.5 Overview of Hutchison…………………………..p.6 Overview of New World Mobility……………….p.7 Overview of SmarTone…………………………..p.8 Overview of Sunday……………………………...p.9 Overview of Verizon…………………………….p.10 Financial Ratio Analysis…………………..…p.11-19 Conclusion…………………………………...p.20-22 INTRODUCTION In this project, we aim to find out the most outstanding telecommunications company for investors to invest on by using financial ration analysis. The seven firms under investigation in this project are AT&T (US), China Mobile (Hong Kong) Ltd., Hutchison Telecommunications Ltd., New World Mobile Ltd., SmarTone-Vodafone, Sunday Communications Ltd., Verizon Communication (US). We are going to begin our analysis by a series of overviews on each firm and related processed data. It is then followed by a clear analysis on the financial ratio of each firm and finally a well-supported conclusion will be provided to end up this project. This project is carried out under certain assumptions. It is presumed that there are only 7 firms in the telecommunication market for our investor to make accurate calculation and recommendation. There is also an elimination of all other resources except the financial records, which are taken under consideration in this analysis. The conclusion generated...
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...Financial Ratio Analysis By 107,108,109,158,159,161 Group 3 MBA (Tech) IT 4Th Year Table of Contents 1.0 Liquidity Ratio…..……………………………………………..………………………………………………………..……………3 1.1 Current Ratio 4 1.2 Quick Acid Test 5 2.0 Debt Ratio…..…………………………………………………………………………………………………………………..………9 2.1 Debt to Equity Ratio 6 2.2 Total Debt to Equity Ratio 6 2.3 Debt to Total Assets Ratio 7 2.4 Capital Gearing Ratio 8 2.5 Proprietors funds to total assets 8 2.6 Long term debt-total capitalization 9 2.7 P-E ratio 9 3.0 Coverage Ratio…..……………….…………………………………………………………………………………………………14 3.1 Interest coverage ratio 11 3.2 Dividend coverage ratio 11 3.3 Debt-Service Coverage ratio 12 4.0 Turnover Ratio…..……………….…………………………………………………………………………………………………16 4.1 Receivable Turnover Ratio 13 4.2 Receivable Turnover Ratio in days 13 4.3 Payable turnover ratio 14 4.4 Payable turnover ratio in days 14 4.5 Inventory Turnover ratio 15 4.6 Inventory Turnover ratio in days 15 4.7 Operating cycles 16 4.8 Cash Cycle 16 4.9 Total assets turnover ratio 16 4.10 Fixed asset turnover ratio 17 4.11 Total capital turnover ratio 17 4.12 Working capital turnover ratio 18 5.0 Profit & Loss ratio….………………………………………………………………………………………………………………22 5.1 Gross Profit Margin 19 5.2 Operating Profit Margin 19 5.3 Pre Tax Margin 20 5.4 Net Profit Margin 20 6.0 Expense Ratio…..……………………………………………………………………………………………………………………24 6.1 Cost of goods sold ratio 21 6...
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...Interpretation of the Ratios 1) Current Ratio-It is a test of solvency or of short-term financial strength of a concern. It is an index of working capital and shows the ability of the concern to meet its obligations and also the capacity to carry on effective operations. Generally, if current assets are twice that of current liabilities, the concern’s working capital position is considered to be satisfactory. 2) Quick Ratio-It shows the amount of cash available to meet immediate payments. Stock-in –trade is deducted from current assets because it is not considered that stock will supply cash as readily as debtors or bills receivable. Bank overdraft is deducted from current liabilities as it is normally considered to be a simple particular way of financing an enterprise and as such is not considered liable to be called in on demand. 3) Inventory Turnover Ratio-It is a ratio showing how many times a company’s inventory is sold and replaced over a period. The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand or “Inventory turnover days” Sales may be substituted with COGS because sales are recorded at market value while inventories are usually recorded at cost. Average inventory may be used instead of the ending inventory level to minimize seasonal factors. The ratio should be compared against industry averages. A low turnover implies poor sales and therefore excess inventory. A high ratio implies either...
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...FINANCIAL ANALYSIS FOR THE TELECOM SECTOR- A REPORT BY GROUP-4, SECTION-C AMAN SAHNI(4C) GAURAV SHARMA(16C) NEHA DEOLIYA(24C) PRATEEK GOEL(28C) SRIVATHSAN S.(43C) 1 INDEX 1. INDUSTRY OVERVIEW 2. COMPANY ANALYSIS 3.COMPETITIOR ANALYSIS 4. CONCLUSIONS 3 6 11 15 2 1. INDUSTRY OVERVIEW Introduction The telecommunication industry has been growing at a tremendous rate in India for the last few years. More than 18 million subscribers are added every month. Driven by various policy initiatives, the Indian telecom sector witnessed a complete transformation in the last decade. It has achieved a phenomenal growth during the last few years and is poised to take a big leap in the future. The telecom industry has been divided into two major segments, that is, fixed and wireless cellular services for this report. Besides, internet services, VAS, PMRTS and VSAT also have been discussed in brief in the report. In today’s information age, the telecommunication industry has a vital role to play. Considered as the backbone of industrial and economic development, the industry has been aiding delivery of voice and data services at rapidly increasing speeds, and thus, has been revolutionising human communication. Although the Indian telecom industry is one of the fastest-growing industries in the world, the current teledensity or telecom penetration is extremely low when compared with global standards. India’s teledensity of 36.98% in FY09 is amongst the lowest in the world. India's...
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...FINANCIAL DECISION MAKING FOR MANAGERS: Ratio And Financial Statement Analysis NAME: JAMES B. TAYLOR DATE: 04/09/2015 Table of Content I. Executive Summary.....................................................................................3 II. Introduction..................................................................................................4 III. Financial statements tools and techniques...................................................4 IV. Exhibits…………………………………………………………………...10 V. Analysis of Results.....................................................................................11 VI. Recommendations……………………………….......................................13 VII. Conclusions……………………………………………………………….13 VIII. References………………………………………………………………...14 Executive summary This paper is focused to assess financial health of a business firm. I have chosen one of the leading retail companies in the country (Higgins, 2011). This paper will carry out a financial analysis on Hamster Limited in order to have a comprehensive assessment about its financial health analysis. This paper will analyze and assess the financial environment in which the company operated. Through a comprehensive analysis, my objective is to understand the influence of financial factors in the firm and its decision making. I will evaluate different ratios to acknowledge their impact on Hamsters performance over the few years. I will identify, assess and interpret...
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...Financial Reporting Analysis Ratio Analysis Of Colgate Palmolive (INDIA) Limited Submitted to: Dr. T. P. GHOSH Submitted by: Group I 1. Apurva Shahi 2. Deepali Agarwal 3. Konda Moulika 4. Mallipati Manoj 5. Mitali Pravin 6. Nidhi Agarwal Contents: 1. Abstract 2. Introduction and details of project 3. Colgate Palmolive( India) Limited Profile 4. Ratio Analysis of Colgate Palmolive( India) Limited I. Profitability Ratios II. Liquidity Ratios III. Solvency Ratios IV. Turn-Over Ratios V. Valuation Ratios 5. Conclusion Abstract: A financial statement is a collection of data organized according to logical and consistent accounting procedures. Its purpose is to convey an understanding of some financial aspect of a business firm. Financial analysis (also referred to as financial statement analysis or accounting analysis) refers to an assessment of the viability, stability and profitability of a business, sub-business or project. It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decision. The present paper explains...
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...Applied Managerial Finance Financial Analysis: Financial Statement Ratios and Metrics November 30, 2013 Financial Analysis: Financial Statement Ratios and Metrics Mary has asked me to provide a list of financial ratios that she needs explained and a computation of each for Apex Printing. She would also like to see a comparison of these ratios to other firms in the printing sector. I am going to provide an indication of how each of these ratios differ from Apex’s and whether or not the ratio is indicative of better performance by Apex (Task List, 2013). Financial ratios are used to look at how an organization performs and what kind of financial situation they may be in. Information that is provided in the financial statement is used to calculate these ratios. Ratios show trends and as comparisons to other organizations. They also have the capability to predict bankruptcy. There are several different types of ratios used according to the particular type of information they want to provide. These are liquidity, asset turnover, financial leverage, profitability and dividend policy ratios (NetMBA, n.d.). Explain and compute Current ratio of Apex Short-term financial obligations can be seen in the liquidity ratio. Short-term creditors use this information to determine whether or not to extend credit to an organization. Current ratio and the quick ratio are the most frequently used ratios in this area (NetMBA, n.d.). As one of the most popular ratios used to compute a company’s...
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...FIN 6406 A Financial Ratio Quarterly Trend Analysis of: The Boeing Company BA Listed on New York Stock Exchange Prepared for: Dr. Deanne Butchey Corporate MBA Program Florida International University By: Justin Papcun Computations Financial Trend Comparison Liquidity: The Boeing Company financial data shows that the company is in place to settle up its obligations in the short term business strategy. As it appears right now, 1.20 is the current ratio and the company’s assets offset its liabilities by 1:2. The quick ratio of 0.37 is lower than the current ratio due to the variance from competition forming from the industry average. The current ratio posted a value of 1 or above consistently, but the same cannot be said for the quick ratio which posted below the value one for Q1-Q4. This decline comes from a recession, a decrease in airline traffic, and the instability of fuel cost. Despite this the current ratio was able to increase value while the quick ratio decreased while still posting a positive number. This was due to an inventory and production decrease. In current liabilities to inventory sector, the numbers did not suffer. In Q1-Q4 Boeing did not post a value below 1, varying between 1.13-1.21. The cash ratio saw numbers between 0.13 and 0.14 for Q1-Q3, and increasing to a 0.21 for Q4. Assets Utilization: This asset ratio shows Boeing is competently generate profitable sales revenues by properly using investments. Looking at the ratio turnover,...
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...Financial Ratios Analysis and Comparison Paper Dianne Davis MHA 612 Professor Johnson June 7, 2014 Abstract It is important for healthcare organizations to understand their present performance and weak areas in order to generate more effective operational strategies. Financial ratio analysis is an effective tool to determine hospital’s performance on several indicators such as ability to pay debt, capability to generate revenue, and sales performance etc. The objective of this paper is to describe role of different financial ratios in understanding organizational performance and in developing new strategy. The paper also presents comparative ratio analysis of local healthcare organization and industry norms. Financial Ratios Analysis and Comparison Paper Introduction Financial planning and effective management play a major role in success of healthcare business. Financial ratio analysis refers to an effective financial management tool that helps in understanding financial performance of the hospital over a period of time. Financial ratio informs about the financial trends and information on key performance indicators that helped in strategy making. Financial ratios can also utilize in comparing business performance of two or more hospitals, and also to assess effectiveness of management. Financial ratios utilized in measuring liquidity of the hospitals, profit evaluation, debt structure, management of cash flow, risk determination...
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