Finance 301: Principles Of Financial: Financial Analysis Of Low Companies
Financial Analysis
Carolyn G. Kollar
February 5, 2017
Finance 301: Principles of Finance
Professor Douglas Smith
Comparing Four DOW Companies
Financial ratios are important for determining how financially successful a company is over the courses of its life or how successful it is compared to others in the same industry. One can compare the company’s ratios over the current year and previous years to see if the company is becoming more successful, less successful, or is maintaining. Financial ratios can also compare a company to another company in the same industry. Figure 1.1 shows the financial statistics for four different companies chosen from the DOW list as a solid comparison on what the different …show more content…
Overall, the higher the ratio the better the performance for the company, but this number cannot be compared outside of the industry or makes for a poor comparison. Thus, in regards to understanding, the comparison has been made against the four companies above, but theoretically one could not make this comparison in an actual analysis. In comparing them, the top two are Walmart and Home Depot.
A stock’s P/E essentially tells one how much investors are willing to pay per dollar of earnings. A P/E is a very simple statistic, and because it is so simple, it does not consider the growth that the company could undergo. But, in comparing the P/E’s of the four companies, Nike is, once again, at the top.
The debt to equity ratio is a measurement used to assess the capital structure of a business. Simply, the debt to equity ratio is a way to examine how a company uses different its funding to pay for its operations. Nike has the lowest, which is a sign of good financial performance.
The times interest earned ratio is a measurement of a company’s ability to honor its debt payments. When the times interest ratio is less than one, the company is not making enough cash to meet its interest obligations, meaning the company is much more vulnerable. Home Depot and Nike come in at the top in regards to the …show more content…
It is only useful to compare companies within the same industry because of different economic or market factors that affect certain industries. After researching and considering the industries, one can know that a company in the utilities industry probably does not grow wild, like a company is the technology industry. This would lead to phenomenally different P/E’s but does not mean that the utility company is “worse”. In regards to the four companies listed above, comparing them to each other does not do them justice because they are from different industries.
Historical Financial Performance of Nike
As Nike was the best company of the four companies compared above, one can look at the historical financial performance of Nike and see many different statistics. Displayed in Figure 2.1, one can see the many different financial ratios for Nike over the last three years. In comparing the financial ratios for Nike over the last three years, one can see many different important financial
Carolyn G. Kollar
February 5, 2017
Finance 301: Principles of Finance
Professor Douglas Smith
Comparing Four DOW Companies
Financial ratios are important for determining how financially successful a company is over the courses of its life or how successful it is compared to others in the same industry. One can compare the company’s ratios over the current year and previous years to see if the company is becoming more successful, less successful, or is maintaining. Financial ratios can also compare a company to another company in the same industry. Figure 1.1 shows the financial statistics for four different companies chosen from the DOW list as a solid comparison on what the different …show more content…
Overall, the higher the ratio the better the performance for the company, but this number cannot be compared outside of the industry or makes for a poor comparison. Thus, in regards to understanding, the comparison has been made against the four companies above, but theoretically one could not make this comparison in an actual analysis. In comparing them, the top two are Walmart and Home Depot.
A stock’s P/E essentially tells one how much investors are willing to pay per dollar of earnings. A P/E is a very simple statistic, and because it is so simple, it does not consider the growth that the company could undergo. But, in comparing the P/E’s of the four companies, Nike is, once again, at the top.
The debt to equity ratio is a measurement used to assess the capital structure of a business. Simply, the debt to equity ratio is a way to examine how a company uses different its funding to pay for its operations. Nike has the lowest, which is a sign of good financial performance.
The times interest earned ratio is a measurement of a company’s ability to honor its debt payments. When the times interest ratio is less than one, the company is not making enough cash to meet its interest obligations, meaning the company is much more vulnerable. Home Depot and Nike come in at the top in regards to the …show more content…
It is only useful to compare companies within the same industry because of different economic or market factors that affect certain industries. After researching and considering the industries, one can know that a company in the utilities industry probably does not grow wild, like a company is the technology industry. This would lead to phenomenally different P/E’s but does not mean that the utility company is “worse”. In regards to the four companies listed above, comparing them to each other does not do them justice because they are from different industries.
Historical Financial Performance of Nike
As Nike was the best company of the four companies compared above, one can look at the historical financial performance of Nike and see many different statistics. Displayed in Figure 2.1, one can see the many different financial ratios for Nike over the last three years. In comparing the financial ratios for Nike over the last three years, one can see many different important financial