Nobody downloaded yet

Ratio Analysis - Math Problem Example

Comments (0) Cite this document
Summary
Ratio analysis Introduction The wider scope of accounting involves identification, quantification, recording, and communication of economic information to facilitate informed decisions among stakeholders. Raw information may however be bulky and disorganized for this role and financial accounting refines the information into financial statements…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER93.4% of users find it useful
Ratio Analysis
Read TextPreview

Extract of sample "Ratio Analysis"

Download file to see previous pages Ratio analysis further simplifies the information and allows for a longitudinal and cross sectional analysis of an organization’s performance. I, in this paper, perform ratio analysis of IBM financial statements for the accounting period ending in the years 2010, 2011, and 2012, and discuss the computed ratios. Accounting ratios Ratio analysis compares different income statement and balance sheet items to determine liquidity, advantage, activity, profitability, and growth potentials. The following is a summary of applied formulae for computing different ratios. ...
The following table summarizes major ratios for the company over the three accounting periods based on the above formulae. Table 1: Computed ratios for IBM for the years ended 2010, 2011, and 2012 Ratio 2010 2011 2012 Current ratio 1.18623342 1.2090307 1.13313467 Quick ratio 0.52857354 1.02281414 0.98846991 Debt to total assets ratio 0.79574622 0.82620048 0.84075562 Debt to equity ratio 3.91733923 4.77688946 5.31436903 Long term debt to equity ratio 0.94793023 1.13501837 1.27720042 Times interest earned 52.5951087 50.0997567 46.7167756 Inventory turnover 21.982449 22.5220151 22.2077018 Fixed assets turnover 1.52856006 1.52461644 1.49766409 Total assets turnover 0.88028417 0.85774652 0.87664097 Gross profit margin 46.07% 46.89% 48.13% Operating profit margin 18.17% 18.97% 19.56% Net profit margin 14.85% 14.83% 15.89 Return on assets 17.06% 17.69% 17.99% Return on share holder’s equity 83.98% 102.25% 113.70% (Data source: IBM annual reports for the years 2010 and 2011) Discussion The company enjoys high liquidity ratios and this indicates its ability to meet its short-term objectives. Its current ratios are good and indicate stability as they fluctuate above one over the three years. Even though the acid-test ratio was low in the year 2010, it improved in 2011 and the slight decrease in 2012 does not induce much threat. IBM however has significantly high ‘leverage’ ratios and this indicates its vulnerability to risks of credit capital. Even though the debt to total equity ratio is bellow 1, its increasing trend over the three years indicate that it will soon reach and even surpass one, a factors that will further expose the organization to sustainability risks. Long-term debt to equity ratio was fair in the year 2010 but also has an ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Ratio Analysis Math Problem Example | Topics and Well Written Essays - 750 words”, n.d.)
Ratio Analysis Math Problem Example | Topics and Well Written Essays - 750 words. Retrieved from https://studentshare.org/finance-accounting/1478422-ratio-analysis
(Ratio Analysis Math Problem Example | Topics and Well Written Essays - 750 Words)
Ratio Analysis Math Problem Example | Topics and Well Written Essays - 750 Words. https://studentshare.org/finance-accounting/1478422-ratio-analysis.
“Ratio Analysis Math Problem Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/finance-accounting/1478422-ratio-analysis.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Ratio Analysis

Ratio Analysis

...? Ratio Analysis In APA Format Technology has improved by leaps and bounds; the last type store has closed down very recently. There are newer products which are being made available by leading companies and these products have been faring very well in the market. Entertainment is a key area which has been targeted by several leading companies; apple is a classic example of one such company. Ipods have become a daily necessity for several people, Ipads have been selling like hot cakes and there are others products that are being manufactured by Apple which are doing reasonably well in the market. This paper will shed light upon the financial ratios of Apple, how the company will fare in...
4 Pages(1000 words)Case Study

Ratio Analysis

...?On Ratio Analysis Ratios analysis is a set of techniques used to assess the financial ratios of a firm pertaining to liquidity, debt, and profitability (Gibson 1982). The analysis focuses on the interpretation of indicators or tools or financial ratios through which an analyst can evaluate the investment worthiness of a firm (Gibson 1982). In the words of Gibson (1982, p. 18), “probably no tool is more effective in evaluating where a company has been financially and in projecting the financial future of a company than the proper use of financial ratios.” This work discusses the importance of...
3 Pages(750 words)Essay

Ratio Analysis

...? Finance & Accounting Introduction to Finance & Accounts With work Assignment Word Count 660) ID Report for Go Ahead Group Plc February 2013 Table of Contents Executive Summary 3 Introduction 4 Ratio Analysis Current & Previous Year 5 Comparison with Prior Period Results 6 Comparison with Industry Average 8 Key Performance Indicators 8 Advantages and Limitations 9 Appendix 1 11 Ratio Analysis (Go Ahead Group Plc., 2012; 2011) 11 Appendix 2 11 Annual Movements (Go Ahead Group Plc., 2012; 2011) 11 References 12 Executive Summary The financial position and performance of a company may be analyzed by a number of ways. Financial reports are analyzed through complex tools like...
6 Pages(1500 words)Essay

Ratio Analysis

...? Ratios Analysis of ASOS Company Executive Summary ASOS is a global fashion Company that deals with 20-somethings.The company specializes in selling more than sixty five thousand products. In addition, ASOS provides an avenue where people exchange ideas and carry out business. The study has provided insight analysis financial ratios of ASOS Company. Whereby, a comparison of financial results for the two years was executed. It can be observed that the financial performance of ASOS Company was higher in 2013 than 2012 based on the financial statements and ratios computed below. In addition, the company performance was higher in reference to industrial...
6 Pages(1500 words)Coursework

Ratio analysis

...? RATIO ANALYSIS FOR APPLE INC. Ratio analysis is a technique in finance analysis and it is very important. This isbecause it involves a conversion of financial statement quantities or figures to aid comparison in a meaningful manner (Dess 2012). The comparison would be within a firm between two financial periods like in our case where we want to analyze Apple Incorporation’s financial statements for two financial periods. Secondly, the comparison could be between firms operating within the same industry. The former is used to compare the performance of the firm within itself in terms of aspects such as improvement in management skills and finance...
10 Pages(2500 words)Essay

Ratio Analysis

...Mc Donalds Ratio Analysis APA Style Report Please put here 6/19/2008 Introduction A financial ment is a compilation of data, which is logically and consistently organized according to accounting principles. Its purpose is to convey an understanding of some financial aspects of a business firm. It may show a position at a moment in time, as in the case of a balance sheet, or may reveal a series of activities over a given period of time, as in the case of an income statement. Financial statements are the major means through which firms present their financial situation to stockholders, creditors, and the general public. The majority of firms include extensive financial statements in their annual reports,...
11 Pages(2750 words)Essay

Ratio Analysis

...Riordan Manufacturing Company Ratio Analysis Memo of the of the Teacher: Accounting II Submitted: 28 February2014 Name of the Institution: To: CEO, Riordan Manufacturing Inc. From: Accounting Department Dated: 26 February 2014 Subject: Ratio Analysis The major purpose of this memo is to outline the recent horizontal and vertical analysis of the ratios completed on Riordan Manufacturing Inc. being provided by the accounts office. The analysis was performed in order to notify the management of the prospective external interests. The analysis was made so that any external investors who might be interested...
1 Pages(250 words)Essay

Ratio Analysis

...Ratio Analysis: Toyota Motor Corporation Ratio Analysis: Toyota Motor Corporation Introduction Toyota Motor Corporation (TMC) is a Japan based multinational corporation that operates in the automotive industry. Toyota is the world’s largest automobile manufacturer in terms of sales and production. This paper will discuss the firm’ key financial ratios and significant financial trends over the last three years and suggest some solutions to enhance its overall financial performance. Ratio Analysis While analyzing Toyota’s operating margin over the last three years, it seems that the company has recovered from the dreadful...
3 Pages(750 words)Research Paper

Ratio analysis

...: Error: Reference source not found Purpose: Error: Reference source not found Formula: Error: Reference source not found Calculations Error: Reference source not found Trend Analysis Error: Reference source not found Total Debt Ratio Error: Reference source not found Debt-Equity Ratio Error: Reference source not found Time Interest Earned Ratio Error: Reference source not found Total Assets Turnover Error: Reference source not found Comparing ratios with the industry averages 6 Total Debt Ratio 6 Debt-Equity Ratio 6 Time Interest Earned Ratio 6 Total Assets Turnover 6 Recommendation 7 Conclusion...
1 Pages(250 words)Coursework

Ratio Analysis

...RATIO ANALYSIS FOR HEWLETT PACKARD AND APPLE INC [Insert al Affiliation] Financial Reporting and analysis Ratio Formulae of ratio Apple, Inc. Company Hewlett Packard Company Leverage ratios/ Gearing ratio Debt ratio Total liabilities/Total Assets 5.046 76.08/103.21=0.74 Debt Equity Ratio Long-term Debt/Equity or total liabilities/Equity 120.29/231.84=0.52 76.08/27.13=2.8 Times Interest Cover EBITD/Interest charged 53.48/0.136=393.08 6.56/0=0 Liquidity Ratios Current Ratio Current Assets/Current liabilities 63.45/63.45=1.0 50.36/43.74=1.15 Acid Test/Quick...
3 Pages(750 words)Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Math Problem on topic Ratio Analysis for FREE!

Contact Us