Financial Ratio Analysis of Landry's Restaurants

Only available on StudyMode
  • Download(s) : 118
  • Published : March 7, 2010
Open Document
Text Preview
Earnings per Share
(Earnings per share = Net Income / Weighed Average Common Shares Outstanding)
Earnings per share measures the amount of net income earned on each share of common stock, a very important measurement, that the shareholders of a firm's stock like to see trending upward. (, 2007) Return on Assets

(Return on Assets = Net Income / Average Assets)
Return on Assets is a measurement of the overall profitability of a firm. It measures the rate of return on each dollar invested in assets. (, 2007) As can be seen by the return on asset ratios for Landry's, the firm invested less money in 2003 in its asset base than it invested in 2002. Current Ratio

(Current Ratio = Current Assets / Current Liabilities)
Liquidity ratios, like the current ratio, provide information about a firm's ability to meet its short time financial obligations. Short-term creditors seek a high current ratio from prospective clients since it reduces their risk. For investors in a company, such as shareholders, a lower ratio is sought, so that more of a firm's assets are working to grow the business. (, 2007) Times Interest Earned

(Times Interest Earned =
(Income Before Income Taxes + Interest Expense) / Interest Expense)
The times interest earned ratio measures a company's ability to meet interest payments as they become due. (, 2007) Because of the increasing amount of long-term debt obligations that Landry's has been carrying from 2002 to 2003, the company's ability to meet the associated interest expenses been carrying from 2002 to 2003, the company's ability to meet the associated interest expenses has also decreased. Asset Turnover

(Asset Turnover Ratio = Net Sales / Average Assets)
Asset turnover measures how efficiently a company uses its assets to create sales (, 2007). From the calculated asset turnover ratios for the fiscal years 2002 and 2003, Landry has maintained its effectiveness at using its assets to...
tracking img