Interpreting Financial Results FIN/571 July 22‚ 2013 Interpreting Financial Results Liquidity: Current Ratio Parrino‚ Kidwell‚ & Bates (2012) detail the current ratio as current assets divided by liabilities. The current ratio identifies a firm’s potential to pay short-term liabilities; higher liquidity is a good sign for potential creditors (Parrino et al.‚ 2012). At the same time‚ however‚ the current ratio should not greatly exceed benchmarks of other competitors (Parrino et al.‚ 2012)
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* Target bond rating * Level of flexibility * Mix of debt and equity * Other Issue As for what should Rajat Singh recommend regarding target bond rating‚ level of flexibility or reserves‚ mix of debt and equity and lastly any other issues. So‚ firstly look into the target bond rating‚ in our opinion DC needs to position itself to obtain a AAA rating. At AAA grade bond rating shows that AAA bond rating is higher in unused debt capacity so at AAA bonds rating Deluxe company has a lower
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FINANCIAL RATIOS Financial ratios are indicators of a company’s performance as discernable from the company’s Balance Sheet and income Statement. We will discuss some of the simple ratios of a company and talk about their significance. Liquidity Ratios: Show the company’s ability to pay of its current liabilities from its current assets. 1. Current Ratio Current assets should be significantly higher than current liabilities so that the current ratio is higher than 2:1. 2. Quick Ratio
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a good indicator of the cost of using those buildings and equipment? Compare that situation to a company with new buildings and equipment where there will be large amounts of depreciation expense. The remainder of our explanation of financial ratios and financial statement analysis will use information from the following income statement: Example Corporation Income Statement For the year ended December 31‚ 2011 | | Sales (all on credit) | $500‚000 | Cost of Goods Sold | 380‚000
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(1) Calculate the firm’s financial ratios for 2007: Vanguard Group 2007 financial ratios 1. Current ratio = current assets/current liabilities = 718‚750/431‚250 = 1.67 2. Quick ratio= (current assets-inventory)/current liabilities = (718‚750-303‚750)/431‚250 = 0.96 3. Inventory turnover= cost of sales/average stock = 1‚362‚480/303‚750 =4.49 4. Average collection period= (average debtors/annual credit sales)×365 = (296‚250/1‚680‚000) ×365 = 64 days 5. Total asset turnover= annual sales/total assets
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The financial ratios are: Liquidity Ratio- The firms ability to satisfy the short term obligations. (Gitman‚ 2007) Activity ratio- That measure the speed with which various accounts are converted into sales or cash‚ inflows or outflows. (Gitman‚ 2007) Debt ratio- That measures the proportion of total assets financed by the firms creditors. (Gitman‚ 2007) Profitability ratio- measures enable the analyst to evaluate the firms profits with respect to a given level of sales a certain level of assets
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FINANCIAL STATEMENTS Accrual-based approach – revenues are recorded at the point of sale and costs when they are incurred‚ not necessarily when a firm receives or pays out cash Cash flow approach – used by financial professionals to focus attention on current and prospective inflows and outflows of cash 1. Balance sheet a. Assets Cash and Cash Equivalents Marketable securities Accounts receivable Inventories Net property‚ plant and equipment Intangible assets b. Liabilities Accounts
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TABLE OF CONTENTS INTRODUCTION 3 MANAGERIAL FINANCE: 3 FINANCIAL STATEMENTS ANALYSIS: 3 RATIO ANALYSIS: 3 FAUJI CEMENT BALANCE SHEET AND PROFIT AND LOSS ACCOUNT 4 RATIO ANALYSIS: 9 INTRODUCTION MANAGERIAL FINANCE: • Managerial finance is concerned with the duties of the financial manager in the business firm. • The financial manager actively manages the financial affairs of any type of business‚ whether private or public‚ large or small‚ profit-seeking or not-for-profit
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A PROJECT REPORT ON AN ANALYSIS & COMPARATIVE STUDY OF FINANCIAL STATEMENTS FOR KALYANI STEELS LTD.‚ PUNE SUBMITTED TO UNIVERSITY OF PUNE IN PARTIAL FULFILMENT OF TWO YEARS FULL TIME COURSE MASTERS IN BUSINESS ADMINISTRATION(MBA) SUBMITTED BY KETAN P. SHETTI (BATCH 2005-07) VISHWAKARMA INSTITUTE OF MANAGEMENT‚ PUNE-48 1 To Whomsoever It May Concern This is to certify that Mr. Shetti Ketan Prakash is a bonafide student of Vishwakarma Institute of Management‚ Pune. He has successfully
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Is F&H’s opportunity cost of capital 4%. How in principle should the CFO determine the cost of capital? a. Assuming that the encabulator market is risky‚ an 8% expected return on the F&H encabulator investments may be inferior to a 4% return on U.S. government securities. b. Unless their financial assets are as safe as U.S. government securities‚ their cost of capital would be higher. The CFO could consider what the expected return is on assets with similar risk. 3 QUESTION 1.8 We can imagine the financial manager doing several things on behalf of the
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