Financial Ratios Analysis of Mazaya Qatar Real Estate and Ahli Bank QSC - Assignment Example

Financial leverage value ratios measure the level to which a company’s assets are financed with debt. According to the analysis, Ahli Bank Q.S.C. has a very high leverage ratio of 6.35. However, Mazaya Qatar Real Estate has a very low leverage value. The outcome of the two companies insinuates that one of them does poorly as its assets may not be enough to settle its debts. Specifically, Mazaya Qatar Real Estate is better than its competitor that is burdened by debts. According to this ratio, Mazaya Qatar Real Estate is in a better position to settle its debts than its competitor.

            The liquidity ratios also insinuate some crucial aspects of the financial situation of the two companies. It gauges the ability of the business to pay its bills. The liquidity ratio of Mazaya Qatar Real Estate is higher than that of Ahli Bank Q.S.C. A higher liquidity ratio means that the company can comfortably pay its expenses. Mazaya Qatar Real Estate has 10.76 while Ahli Bank Q.S.C has 1.16. In respect to this, the real estate company still stands stronger as both the acid-test or current ratio and the net working capital indicate a similar outcome.  

            The profitability ratios also had much information about the two companies. The ratios determine the corporation’s ability to earn profits. In this case, Mazaya Qatar Real Estate depicted lower profitability than its counterpart. It posted a cash return on capital invested of 0.11 while Ahli Bank Q.S.C posted a 0.24. It indicates that Ahli Bank Q.S.C can make more earnings if profitability is calculated before the calculation of interest and tax. However, the net profit margin indicates otherwise. If profitability is calculated after taxation, the ratio depicts that Mazaya Qatar Real Estate has higher profitability than its counterpart.

            The efficiency ratios were also computed. They designate the ability of the company to utilize its assets. In this segment, Mazaya Qatar Real Estate depicted a higher asset turnover ratio than Ahli Bank Q.S.C. It means that it has a higher capability of using its assets more than Ahli Bank Q.S.C. It had an asset turnover ratio of 0.09 against Ahli Bank Q.S.C. of 0.03.

            Finally, the market value ratio that shows the market perception about the company in the future favored Ahli Bank Q.S.C., which had a ratio of 0.15 against Mazaya Qatar Real Estate’s 0.07. The outcome indicated that shareholders will view Mazaya Qatar Real Estate negatively than they will do to Ahli Bank Q.S.C.

            In conclusion, the best company in terms of efficiency, liquidity, and the ability to pay the debt with equity is Mazaya Qatar Real Estate. However, in terms of profitability and market perception, Ahli Bank Q.S.C, does best. The reason for this variability is that Mazaya Qatar Real Estate is a big company that is established. It is, therefore, stable, unlike Ahli Bank Q.S.C that still has a chance for growth and maximization of profit.