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That indicates that the company was more liquid in 2010 than in 2007. Therefore, the company was in a better position to meet its obligations in 2010 as compared to 2007.
From the ratios, it is evident that the company performed better in 2007 than 2010. The only area in which it performed better in 2010 is in liquidity ratios. That indicates that resource utilization was better in 2007 as compared to 2010 (Piper, 2013, p.53). The cost and expenses may have contributed to the differences in the ratios. Minimizing costs and expenses would act to rectify the trend and ensure the profitability improves in the future. The effect of the expenses is evident as the ratio of the selling, general and administrative expenses to sales is higher in 2010 than in 2007. The ratio is 0.147 and 0.141 respectively. Reducing the expenses would increase the profit and income for the company. That would increase profitability over the years (Brigham and Ehrhardt, 2013, p.107).
The asset turnover ratios are higher in 2007 than in 2010. The only turnover ratio that is higher in 2010 than 2007 is the property, plant and equipment turnover ratio. That indicates that the company is able to generate more sales from its assets in 2007 than in 2010. An improvement in this statistic may be possible if the company achieves more sales given the increasing assets over the years. The increased sales would improve the turnover ratios and result in an increase in profitability (Kimmel, Weygandt, and Kieso, 2012, p.689). The Operating Profit influences the Return on Capital Employed (ROCE) to a large extent. The operating profit in 2010 is lower than in 2007. That, coupled with the higher operating capital in 2010, gives a lower return on capital compared to that of 2007.
In all aspects, profitability has a huge impact on the Return on Capital Employed (ROCE) of the company. A falling ROCE may be an indication of the company’s falling competitive advantage. An
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Financial analysis can be used internally to appraise issues such as effectiveness of employees, operations and credit procedures. Moreover, it can be used externally to evaluate potential investments and the worthiness of credit borrowers.
3. a. Sales are projected to increase in coming years. 4. c. priced correctly 5. d. Company X has higher leverage than Company Y. 6. a. $129 7. a. 0.2 8. a. $ 416.25 9. b. 5.00% 10. a. 9.49% 11. c. 13.36% Problems 1. a. How and when should K2 account for their warranty?
Select either the balance sheet or income statement and explain how the use of it may be applied to your everyday life. The financial statement selected for the purpose of this part of this report is the Income Statement. The income statement shows the profit or loss incurred by a business entity over a period of one financial year (Wild, 2006).
The company was established in 1777 by Bass Williams with its headquarters based in Denham in UK. The International hotel group operates in hotel industry and offers hospitality services to its customers (Intercontinental Hotel Group, 2013). The company reported a net income of 460 million dollars as at 2011 and a net operating income of 1,768 million dollars in the same period (Intercontinental Hotel Group, 2013).
A ratio analysis has been conducted using various analytical tools, which are described in the paper. The paper contains a summary of quantitative analysis that include the balance sheet analysis, the analysis of the income statement, the cash flow analysis, the analysis of the operating efficiency, the analysis of ROE, credit and liquidity analysis and the growth expectation.
The brand of the company particularly targets 15 to 25 years old males and females covering mainly the U.S. and Canada and having retail stores hovering around 929 with an online store as well. Low-rise jeans,
nformation on a company’s assets, liabilities and owner’s equity whereas the statement of income provides information on a company’s revenue and expenses. By analyzing them management shall be aware of their company’s strengths, weakness and the limits of its resources
However, the balance sheet of Kellogg has remained very risky due to much higher amount of debt included in its capital structure. As per the ratio analysis, both firms have more or less performed on a similar footings and not much important discrepancy is found
The GKN Driveline division develops, builds, supplies a wide variety of automotive driveline products and systems. GKN Powder Metallurgy produces the metal powder used to manufacture automotive and industrial components. GKN Land
Therefore, the information from the financial statement and ratios has been used to analyse the performance of the selected two companies with three other major competitors (i.e. Millennium & Copthorne Hotels Plc., Safestay and Minoan Group Plc.) in the respective industry.
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