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Finance Methods

In: Business and Management

Submitted By mishxo16
Words 704
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2. The purpose of the analysis was to evaluate and compare the financial statements of Magna Intl, and Linamar. The emphasis was to be able to identify between the both which is superior to the other. Comparing the gross and net margins between the two companies, Linamar has a slightly higher margin in year end which is a good indicator that the company was in good financial standing in comparison to Magna Intl. In terms of ratios comparing both companies together Linamar with a 1.13 year end quick ratio and their current ratio was 1.72 which was significantly higher than Magna Intl as they had a quick ratio ending with 0.4 and a current ratio to 1.31. The current ratio is purpose is generally to give an awareness of the company's ability to pay back its liabilities using its assets. The difference between the numbers make it clear that Linamar did significantly better in terms of paying back their investors short term and long term. As we compare the long term debt to equity Magna Intl. was doing better than Linamar has their long term debt was less, meaning they paid for most of their ventures and expenses using their company assets. In terms of working capital Linamar had a significantly higher working capital as well which helps measure it’s short-term financial standing and makes the company’s efficiency clear. The inventory turnover rate between both companies shows that Magna Intl at a 11.5x and Linamar at a 9.17x, which shows that Magna Intl had effective and strong sales, while Linamar has excess inventory due to poor sales. Comparing all statistics, the 2014 year-end numbers have shown that Linamar had a more successful turn out rate than Magna Intl between the two companies, it is clear that Linamar has a higher standing than Magna Intl.

3. Comparing Magna Intl and Linamar to the US Industry Average we will analyze and determine if either company is

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