Credit and Market Risks - Assignment Example

Ratio analysis helps in identifying how a firm is utilizing its resources, how it is managing its cash flow, and how much profit it is able to earn on the investment the firm has made and these ratios are helpful for the management to make certain decisions like whether the management should raise more capital from debt or not, how much capital structure of the firm is risky at the moment, does the firm has sufficient working capital, etc. In addition to this, these ratios are used by investors, shareholders, competitors, suppliers, distributors, and other stakeholders of the company in order to analyze the performance of the firm against other competing firms in the industry and they also make their decisions using these financial ratios.

Ratios are used by the management of the firm to predict the future performance as well as compare the performance of the firm against their own performance and performance of other firms in the industry. In addition to this, the seminar was helpful as the concept of benchmarking was explained in an interesting way. The way management uses benchmarking techniques to analyze the performance of the firms and how benchmarking is used to set targets and goals was also explained in the seminar. Concepts, as well as implications of different ratios, were demonstrated in the seminar in a way that helped in improving the knowledge and now I am able to better understand the concept and how people used it.

There were different concepts and ratios explained and the use of these ratios was explained which was helpful for me in having a better idea of these ratios. Different kinds of ratios were discussed like liquidity ratios, profitability ratios, gearing ratios, and investor interest ratios. Also after taking these seminars I am able to know better about how important liquidity for a firm is as well as other concepts. In addition to this, ratios of Mesopotamia PLCs were calculated and it helped in having a better idea of the firm’s performance, its profitability, and its riskiness.