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Financial Ratio Analysis of two companies

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Financial Ratio Analysis of two companies
FINANCIAL RATIO ANALYSIS

Table of Contents3

Abstract4

Introduction4

Memorandum4

Profitability of Sample Company5

Sample Company ROI for 20005

Sample Company ROI for 20015

Stock Performance6

Activity of Sample Company7

Leverage of Sample Company7

Liquidity of Sample Company7

What Is Necessary to Assess the Company?8

What Ratios Have the Most Value?10

What Other Factors, Beyond Ratios, Need To Be Considered?10

How Would Your Assessment Criteria Change If The Company In a Different Industry12

Changes in Assessment Method12

Conclusion13

References14

Appendix A - Sample Company's Financial Statements from 1999 - 200115

Appendix B - Financial Ratio Analysis of Sample Company19

Abstract

This research paper will evaluate Sample Company using review standard financial ratio analysis techniques and assess its potential as a good investment. This is written in the form of a memo to the CEO of an Alabama-based firm, looking for sound financial advice with regards to whether of not buying stock in Sample Company is a sound investment.

Introduction

This research paper will reveal the financial analysis techniques used to evaluate the financial performance of the Sample Company, and evaluate the company's worthiness as an investment. The paper is divided into three sections. The first section is the memo, which is the main body of the paper. The second section, Appendix A, includes as a reference contains each of the sets of the four financial statements that show Sample Company's performance from 1999 to 2001. The third section, Appendix B, contains the actual financial ratio analysis techniques, showing the company's performance in 2000 and 2001, the percent change in performance between these years, a short description of the meaning of each ratio, as well as a short assessment of the company's change in performance between 2000 and 2001. Using these appendices to support the financial analysis ideas expressed in the memo, the reader should feel that


References: Memorandum Date:July 1, 2003 Activity of Sample Company The activity ratios measure the company 's management of asset levels and sales (Marshall, 2002) Leverage of Sample Company Leverage is the use of debt to finance company assets (Marshall, 2002) Liquidity of Sample Company The liquidity of a company is the ability to meet its loan obligations as it relates to its current assets and its current liabilities (Marshall, 2002)
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