Ratio Analysis
Joyce Wallace-Butler
HCS/571
February 11, 2013
Shawishi Haynes

Ratios Analysis
The relationship between two variables is defined by ratios. When dividing the dollar amount of one item on a financial statement by the amount of another item on the financial statement a financial ratio is computed. Expressing the relationship of two variables for ease of comparison and interpretation of other information is the purpose of ratio analysis. A ratio analysis computation allows a look at a particular time period in a financial statement. Ratios present a true picture of a company’s financial health, which serves as a control. In analyzing a business one would want to know if enough funds are being generated, if there is a chance of the company defaulting on obligations, if the company assets were being utilized properly and if there were projected short term and long term cash flow positions. To answer some of these questions several ratios related to the assets, liabilities, revenue, and expense categories on a financial statement will be evaluated. Financial Statement Category - Assets

Current ratio and total debts to asset ratio are two of the ratios used to evaluate the strength, of a business. Current assets divided by current liabilities will yield the current ratio. In an example from the financial statement of the University of Chicago Medical Center (UOCMC), of June 30, 2012 and 2011 the total current assets of $356,442 divided by the total liabilities of $190,257 in 2012 yielded a current ratio of 1.87. A current ratio of 1.5 is considered good in most industries. As the number reaches or goes under one, this identifies the company has a negative working capital (Kennon, J. 2013). The total debt to total assets ratio identifies the company’s financial risk by showing how much of the assets of a company is financed by debt. Usually the lower this ratio figure is the better off the company. The formula can be displayed by showing the...

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RATIOANALYSIS
Financial ratios are useful indicators of a firm's performance and financial situation. Most ratios can be calculated from information provided by the financial statements. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms. In some cases, ratioanalysis can predict future bankruptcy.
Financial ratios can be classified according to the information they provide. The following types of ratios frequently are used:
1. Liquidity ratios
2. Capital Structure and Solvency
3. Return On Investment
4. Operating Performance
5. Asset Utilization
6. Market Measures
The ratios measure the short term ability of the company to pay its current short-term liabilities.
1. Liquidity Ratio
Liquidity ratios provide information about a firm's ability to meet its short-term financial obligations. They are of particular interest to those extending short-term credit to the firm. Two frequently-used liquidity ratios are the current ratio (or working capital ratio) and the quick ratio.
i. Current ratio:
The current ratio is the ratio of current assets to current liabilities
The company have decreasing trend in current ratio...

...Turnover Estee Lauder – 7795.8/5335.6 = 146.1%
L’Oreal – 19495.8/24044.5 = 81.1%
Receivables Turnover Estee Lauder – 7795.8/(746.2+853.3)/2 = 9.75
L’Oreal – 19495.8/(2685.3+2442.3)/2 = 7.6
Coverage
Debt to Total Assets Estee Lauder – 1572.2+1798/5335.6 = 63.2%
L’Oreal – 2596.6+6582.1/24044.5 = 38.2%
Cash Debt Coverage Ratio Estee Lauder – 956.7/(3370.2+3512.6)/2 = 27.8%
L’Oreal – 3303.6/(9178.7+9693.1)/2 = 35%
Profitability measure a company’s ability to generate profits. The Return on Investment for Estee Lauder is larger than L’Oreal’s, meaning Estee Lauder is more efficient with its investments. The return on capital employed indicates the efficiency and profitability of capital investments. Estee Lauder seems to have a better efficiency of capital investments than L’Oreal by about three percent. Operating Margin is a measurement of what amount of revenues is left over after paying for variable costs. L’Oreal makes about 16 cents on the dollar where Estee Lauder makes about 10 cents on the dollar. L’Oreal is more efficient with their pricing strategy and earning more per dollar of sales. Gross margin is the ratio of a dollar revenue that is used to cover costs and obligations. Both companies have relatively high gross margins although Estee Lauder is more efficient in covering costs with it’s revenue than L’Oreal. Sales Growth is simply the growth in sales from the previous year in a percentage. L’Oreal grew...

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RatioAnalysis University of Phoenix
HCS/571 Finance Resource Management Sept 24, 2013Rosetta Stringfellow, MBA, BSRatio AnalysisRatioanalysis is a widely used managerial tool that compares one number with another to gain insights that would not arise from looking at either of the numbers separately. Ratioanalysis is used to examine and interpret the relationship between two numbers on a financial statement. This is done so that the managers of a facility can determine whether or not the organization needs to change any of their financial variables in order to remain competitive in their market. The ratioanalysis converts numbers into meaningful comparisons which managers can use to compare their facilities with others within the same market. The management team can also use the ratioanalysis to see how the facility is performing from year to year. In sum, ratioanalysis shows the strengths and weaknesses of a health care facility (Finkler, Kovner, & Jones, 2007).
The financial data for this paper are from the financial statements of Norwalk Hospital located in Fairfield County, Connecticut. Common size ratios allow comparisons between comparable health care organizations. It is important to see how the...

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RatioAnalysis
Cynthia Nelson
HCS/571
September 2 2013
Joseph Rudd
RatioAnalysis
Financial ratioanalysis is the calculation and comparison of ratios pulled from the information in a company’s financial statements (Cleverly & Song, 2011). The financial report is used by organization to determine the financial health and stability of an organization. The ratiosanalysis data are found on the business Profit and Loss Statement and the balance sheet (Loth, 2013). These financial documents provide data for a specific time usually fiscal year (Cleverly & Song, 2011). The ratios are then obtained through formula divided into categories that address the different focus areas of management (Suarez & Lesneski, 2011). The company WW Enterprises uses the four major areas Liquidity, Solvency, Profitability; and Efficiency that measure how well the organization is using its resources (Loth, 2013).
Liquidity ratio is a quick look at organizations ability to meet current financial obligations (Staff, 2013). The Liquidity ratio data for WW Enterprise includes the current ratio, the quick ratio and the operating cash flow ratio (Loth, 2013)
LIQUIDITY RATIOS.
Current Assets/Current Liabilities
=52,100/30834=1.725(1.73)
The ratio results...

...RatioAnalysisRatioanalysis is used to evaluate relationships among financial statement items. The ratios are used to identify trends over time for one company or to compare two or more companies at one point in time. Financial statement ratioanalysis focuses on three key aspects of a business: liquidity, profitability, and solvency.
Liquidity Ratios
Liquidityratios measure the ability of a company to repay its short‐term debts and meet unexpected cash needs.
Current ratio
The current ratio is also called the working capital ratio, as working capital is the difference between current assets and current liabilities. This ratio measures the ability of a company to pay its current obligations using current assets.
Current Ratio = Current Assets / Current Liability
Quick ratio
Current Ratio = Quick Assets / Current Liability
Inventory turnover
The inventory turnover ratio measures the number of times the company sells its inventory during the period. It is calculated by dividing the cost of goods sold by average inventory. Average inventory is calculated by adding beginning inventory and ending inventory and dividing by 2.
Inventory Turnover ratio = Cost of Goods Sold / Average inventory
Debtors...

... Section III: Financial Analysis—RatioAnalysis
Profitability Ratios
When evaluating the company’s profitability, we pay attention to the following ratios which are commonly analyzed: Net Profit Margin, Accounts Receivables Turnover, Return on Assets and Return on Equity. From the tables and figures, all the ratios have increased over the past five years except for 2012. This means UPS is overall a healthy company and does a good job at generating profits.
Net Profit Margin Ratio
It measures how much net profit a company can earn from every dollar of sales. As shown in Table 1, net profit margin for UPS keeps consistent for each year. The profit fell in 2012 for several reasons, mostly due to the prohibition decision issued by the European Commission to stop the acquisition of TNT Express. The termination fee and related expenses are $284 million, which has a big impact the International Package segment (10-K: UNITED PARCEL SERVICE INC,Annual Report,28-Feb-2014). Also chief executive officer Scott Davis attributes this result to a cheaper and slower modes of transport in a slower growth environment that affects the profitability. In 2013, the ratio has been increased to 7.89%, this indicates UPS becomes more profitable and has better control over its expenses compared to previous years.
Accounts Receivables Turnover
This ratio...

...Running Head: RATIOANALYSIS
Starbucks Corporation & McDonalds Corporation
McDonald’s Corporation
McDonald’s Corporation operates in the food service industry. The company has its restaurants in more than 100 countries of the world. McDonald’s, the world’s largest food chain is headquartered in U.S. having an employee population of 390000 (About McDonald's..., 2008).
Starbucks Corporation
Seattle based, Starbucks Corporation is the leading coffeehouse chain in the world. The company has its operations in more than 44 countries. The main products offered by Starbucks various kinds of drinks, snacks, coffee beans. The company also operates in the field of marketing of music, books (The Company, 2008).
RatioAnalysisRatioAnalysis (2007)
Ratios Starbucks McDonalds
Current Ratio 0.79 0.80
Quick Ratio 0.30 0.67
Debt Equity Ratio 1.34 0.92
Proprietary Ratio 0.43 0.52
Solvency Ratio 0.57 0.48
Inventory Turnover Ratio 12.13 118.77
Gross Profit Ratio (%) 23.34 34.69
Net Profit Ratio (%) 7.15 15.67
Return on Proprietors' Funds (%) 29.45 15.67
Earning Per Share 0.91 2.06
Current Ratio
Current Ratio may be defined as the relationship between current assets and current liabilities. It is also known as working capital...

...RatioAnalysisRatioanalysis is basically used to understanding the financial health of a business entity. With the help of ratios we can easily calculate from current year performance of the companies and are then compared to previous years. Ratioanalysis conducts a quantitative analysis of information in a company’s financial statements. These Ratios are most commonly used in banking sector can be divided into five main categories
Liquidity Ratios
Leverage Ratios
Profitability Ratios
Activity Ratios
Market Ratios
A) Liquidity Ratios
Liquidity Ratios are used to determine a company's ability to meet its short terms obligations.
These include;
1) Current Ratio
2) Acid Test Ratio
3) Working capital
Current Ratio
What Does Current Ratio Mean?
A liquidity ratio that measures a company's ability to pay short-term obligations. Also known as "liquidity ratio", "cash asset ratio" and "cash ratio".
OR
It is a measure of general liquidity and is most widely used to make the analysis for short term financial position or liquidity of a firm. It is calculated by dividing the total of the current assets by total of the...