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Profitability Efficiency and Liquidity

In: Business and Management

Submitted By sajid87
Words 296
Pages 2
Follow the report format

Talk about profitability, liquidity and efficiency using the respective ratios for all three.

Compare ratios across the years.

Divide essay into three parts 1. Profitability then talk about all the profitability ratios like ROI, profit margin etc for each of the ratio to the spot the trend (across three years) 2. Liquidity and 3. Efficiency
- state how it’s doing cross sectional across industry

Compare the current year to industry average. - If it’s better than industry average suggests reasons why they're a strong suit in their field. If lower suggest what their limitations are. - What they could do to improve E.g. if its average collection period is worse than industry average.
Should say this company should exercise stricter policies in dealing with trade creditors. Or incentivize them with better credit-terms and discounts.

Suggest if the profitability efficiency and liquidity is improving and getting worse. - If better suggest that it indicates that the company is taking measures to improve themselves and suggest how they’ve done it. - If it’s getting worse say that the company should really focus on improving it and how.

Needs to know how the numbers are derived. - like EPS have to say its net income over no of shares and the improvement - Suggest that they are better at controlling working capital or managing expenses or they’ve improved sales. Essentially, maximising equity value per share

Conclusion - Company’s strengths and weaknesses in terms of these 3 factors. - State how they can improve or what’s good about them they should continue doing.

***Scoring marks - Suggest real reasons why their ratios are improving or getting worse than industry. - Research on what the company's future plans are. - Suggest which ratios would improve in the...

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