FIN 370 Week 2 Industry Averages and Financial Ratios Paper Final Draft

Fixed Assets Turnover Inventory Turnover Accounts Receivables Turnover Receivables Turnover Ratio Total Assets Turnover Solvency Total Debt to Asset Ratio Total Debt to Equity Ratio Cash Debt Coverage Ratio Free Cash Flow

Financial ratios are important in assessing the two companies’ performances. Referring to Exhibit A and B, we see that Sears relied heavily on debt financing. Although its 1997 ROE was high, it had a 300 days cash conversion cycle and a slow A/R turnover ratio. After evaluating various ratios, we concluded that the driving force behind Sears’ profitability was its proprietary card business. For a retailer, a strategy of using flexible payment options to boost sales is not a viable long term solution. The slow A/R turnover and negative operating cash flow cause concerns. On the other hand, Wal-Mart had a quick cash conversion cycle of 91 days, and a working capital turnover of 24/yr (vs.10/yr for Sears). These ratios represent a retail company with sound fundamental strategies, as well as the implementation and execution of those strategies. The financial ratios gave us insights into the companies’ operating and financing strategies, putting the two companies’ annual results into

The annual report provides important company and financial information to investors, customers, employees, and the public. A company's balance sheet displays a company's assets, liabilities, and equity. Running a company involves continual examination and evaluation of its performance. Ensuring the continued profitability of an enterprise, the use of financial ratios is vital to analyze. Utilizing this data, I evaluated Nike Inc., Dicks' Sporting Goods, and Costco's annual reports. I focused on the balance sheets for 2016, to calculate the working capital, current ratio, and quick ratios in an effort to determine their liquidity. Also does my analysis coincide with the company's Management Discussion and Analysis (MD&A).

In general there are 10 ratios that govern the finances of an organization. But, we have been given only three ratios though all the ratios are essential because they acquire nearly 90 percent of the information contained in the financial statements. These can be any but we have to choose the best three that certainly makes the difference. The major three ratios would be the operating margin, it is an essential ratio that deals with the organization’s profitability

These ratios are used to measure companies’ operating cycle.() Firstly in 2012, the receivables turnover for Oroton and Country Road are 54.86 times per year and 93.02 times per year. This indicates that Country road can collect cash from their customer faster than Oroton. Secondly, the payables turnover for Oroton and Country Road are 12.15 and 8.44 times per years. And it would be easier to analyze day payables which Oroton’s is 30 days and Country road’s is 43 days. This ratio shows that Country road has longer credit term to pay their suppliers than Oroton. Finally, the inventories turnover for Oroton and Country Road are 54.86 and 93.02 times per year. It is obvious that Oroton takes longer time to sell all of their inventories than country road. All of these ratios indicate that Country road has shorter operating cycle than Oroton. Therefore, they tend to have higher performance in terms of liquidity because they can generate cash faster.

For each measure, I attempt to build the best empirical mapping as made available by my data. First, I calculate a firm’s value by adding the book value of debt to the market value of equity. I measure profitability as net income over firm value, financial leverage as book debt over market equity, capitalization as book equity over assets, growth as market equity over book equity, and volatility as the quarterly standard deviation of daily log returns. For ease of replication, I collect these variable definitions into the appendix. Note that although the growth variable appears similar to the usual Tobin’s q measure of non-bank firms, banks by design have a large proportion of their assets held as debt in the form of deposits, so the usual approximation of neglecting liabilities does not apply. For bank-specific variables, I also compute total income as non-interest income plus net interest income. I construct the non-interest income ratio (NIIR) by dividing non-interest income by total income, the non-bank subsidiary ratio (NBSR) by dividing the count of non-bank subsidiaries (NAICS codes not equal to 5221) by total subsidiaries, and normalize loans and debt by dividing by value. All figures use the fullest available information. All tables drop all observations missing any relevant variables. I report all ratios in percentage terms. To control for outliers outside the scope of this paper, all ratios are winsorized at the 1% level, where the sample is across all available bank-quarters in the

Overall regards to liquidity ratios, the higher the number the better; however, a too high also indicates that the firms were not using their resources to their full potential. Current ratio of 1.0 or greater shows that a company can pay its current liabilities with its current assets. JWN’s ratio increased from 2.06 in 2007 to 2.57 in 2010, and slightly decreased to 2.16 in 2011. JWN’s cash ratio increased significantly from 22% in 2007 to 80% in 2010. JWN has a cash ratio of 73% in 2011, which is useful to creditors when deciding how much debt they would be willing to extend to JWN. In addition, JWN also has moderate CFO ratio of 46%, indicating the companies’ ability to pay off their short term liabilities with their operating cash

It is important for healthcare organizations to understand their present performance and weak areas in order to generate more effective operational strategies. Financial ratio analysis is an effective tool to determine hospital’s performance on several indicators such as ability to pay debt, capability to generate revenue, and sales performance etc. The objective of this paper is to describe role of different financial ratios in understanding organizational performance and in developing new strategy. The paper also presents comparative ratio analysis of local healthcare organization and industry

Before beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This document will use a variety of these ratios to analyze the firm, Sample Company, as of December 31,2000.

Ratios for return on assets and return on equity offer support for the loss in stockholders’ equity. Return on assets went from 13.1 in 2000 to 5.1 in 2001 and return on equity dropped from 25.4 in 2000 to 8.7 in 2001. Return on equity represents return on assets divided by the difference of 1 and debts/assets. This supports the conclusion that cost of sales, a reflection of asset investment, is most responsible for the lackluster net income of 2001. The price/earnings (P/E) ratio further demonstrates the fluctuation in value to stockholders from 1998 to 2001.

Several financial ratios can be considered when looking at a company’s economic performance. However, given all the possibilities it is important to focus on a few key areas that are functionally related. Therefore, for the purpose of analyzing Halliburton’s financial position as well as its competitors, some common ratios can be used such as current ratio, debt-to-total assets, inventory turnover, average collection period, net profit margin, and return on total assets (ROA).

Team E has been charge with the task of preparing an analysis to evaluate Microsoft and IBM’s financial performance. This will be done by using trends, financial ratio analysis, and the firms’ most recent statements of cash flow. Team E will evaluate each firm’s financial performance for the last two years by (1) performing financial ratio analysis, (2) performing trend analysis, and (3) compare and contrast the findings. Team E’s analysis will include:

Conducting financial analysis for firms can be an important avenue to understand financial stability or risk. Utilizing specific metrics and comparing them to like industries allows for an understanding of the viability and stability of the firm among its competitors. Analyzing historical data and translating this information into specific ratios allows for a strong comparison among organizations on the same level. Presented is a financial analysis of Happy Hamburger Company with specific examination of the firm’s strengths and weaknesses based upon current ratio, day’s sales outstanding, inventory turnover, fixed asset turnover, total asset turnover return on sales, return on assets, return on equity, and debt ratio.

Most companies spend a lot of their time evaluating their bottom line, because in theory a company’s main objective is to produce and ensure profits. Profits are what make the wheels on the bus go around and around, so it is understandable that profitability ratios are one of the most used tools of financial ratio analysis. Profitability ratios are used to evaluate a company’s profit margin, investments, and return on equity (investors). Profitability ratios can be dividing into two different types, margins and returns (Peavler, 2014). Margin ratio types evaluates gross profit margin, operating profit margin and cash flow margin. The return ratio types evaluates return on assets, return on equity, and cash return on assets. When it comes to reaching profits or making money, companies have to find a way to be more efficient year after year. Asset-utilization ratios are used to measure the efficiency of a business when it comes to using their assets to make money (Hartman, n.d.).

This study explains the relationship between the risk-adjusted profitability and leverage ratio for European as well as banks of United States. Adjusted risk and profitability is calculated by stock prices and numerical figures. Applying a dynamic panel regression and controlling for several bank characteristics (e.g, size, liquidity endowment, and loan portfolio quality), the report concluded that banks adjust their equity-to-debt ratio (defined as total assets over book equity) faster than the industrial companies.