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Unit 2 Discussion Board for Financial Management

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Submitted By suburbanmomma
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Financial ratios are significant in terms of comprehending how a business is doing financially. My co-workers and I are working for a finance business and we have been talking about the advantages of the different financial ratios. Our job is to name four different financial ratios and why they are significant to both banks and investors.
The business that I have chosen to discuss is the Coca-Cola Company. As I was investigating their Website as well as the investors’ part of the Website, I came across Coca-Cola’s financial documents for 2008. The documents that I came across included: income statements, balance sheets, as well as the cash flow statements. While calculating the market value ratio for Coca-Cola, the P.E. ratio is 22.02, and the market to book value ratio is simply a scope of how costly stocks are (Brooks, 2010) (Financial Statements, n.d.).
The larger that the price earnings ratio is, the more we have to pay for every dollar earned. The larger the market to book value is, the more we have to pay for every dollar of equity we have written on a balance sheet. As stated before, the price earnings ratio was 22.02 (Financial Statements, n.d.). This demonstrates that Coca-Cola is expanding a lot quicker than their competition. Due to the market to book value being 6.61, Coca-Cola can have an idea of how advantageous they are, and whether or not they are using their assets wisely (Financial Statements, n.d.).
Next, I will discuss Coca-Cola’s profitability ratio. The profit margin depicts the amount of every dollar that actually gets down to the bottom line in terms of income (Brooks, 2010). The profit margin is 21.09 percent, and is very high in comparison to their competitors, who normally run around 10 percent or less. This tells me that Coca-Cola is a very profitable company. Returns on assets are dependent on the industry in terms of

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