Ratio Analysis
University of Salford
Salford Business School
Course: MSC Management
Module title: Managing finance
TITLE OF ASSIGNMENT: Ratio Analysis
Name: Agbasimelo E. Ifeanyi
Roll no: @00316215
Instructed by: David Wright PART A PAGE 1.1 Sales turnover index 4 1.2 Gross profit margin 4 1.3 Net profit margin 5 1.4 Return on capital employed 5 1.5 Current ratio 6 1.6 Acid test ratio 7 1.7 Interest cover ratio 7 1.8 Debt/total capital employed 8 1.9 Debt/equity 8 1.10 Stock turnover 9 1.11 Debtor collection period 10 1.12 Creditor repayment period 10 1.13 Working capital cycle 11 1.14 Fixed asset turnover 11 1.15 Total asset turnover 12 1.16 Working capital turnover 12 1.17 Return on shareholders equity 13 1.18 Earnings per share 13 1.19 P/E ratio 13 1.20 Dividend per share 14 1.21 Earnings yield 14 1.22 Dividend yield 14 1.23 Dividend cover 15 PART B PAGE 2.1 Comments to the board of directors 16 PART C 3.1 further information required to make the analysis more meaningful 18
PART D
4.1 limitations of ratio analysis to a potential investor 19
5.0 Bibliography 22
FINANCIAL PERFORMANCE 1.1 Sales turnover index: formula > next year x base number Base year
Assumption: assume an index number of 100 and a base year of 2004. Therefore
2004 2005 2006 2007 8400 x 100 12600 x 100 13860 x 100
Salford Business School
Course: MSC Management
Module title: Managing finance
TITLE OF ASSIGNMENT: Ratio Analysis
Name: Agbasimelo E. Ifeanyi
Roll no: @00316215
Instructed by: David Wright PART A PAGE 1.1 Sales turnover index 4 1.2 Gross profit margin 4 1.3 Net profit margin 5 1.4 Return on capital employed 5 1.5 Current ratio 6 1.6 Acid test ratio 7 1.7 Interest cover ratio 7 1.8 Debt/total capital employed 8 1.9 Debt/equity 8 1.10 Stock turnover 9 1.11 Debtor collection period 10 1.12 Creditor repayment period 10 1.13 Working capital cycle 11 1.14 Fixed asset turnover 11 1.15 Total asset turnover 12 1.16 Working capital turnover 12 1.17 Return on shareholders equity 13 1.18 Earnings per share 13 1.19 P/E ratio 13 1.20 Dividend per share 14 1.21 Earnings yield 14 1.22 Dividend yield 14 1.23 Dividend cover 15 PART B PAGE 2.1 Comments to the board of directors 16 PART C 3.1 further information required to make the analysis more meaningful 18
PART D
4.1 limitations of ratio analysis to a potential investor 19
5.0 Bibliography 22
FINANCIAL PERFORMANCE 1.1 Sales turnover index: formula > next year x base number Base year
Assumption: assume an index number of 100 and a base year of 2004. Therefore
2004 2005 2006 2007 8400 x 100 12600 x 100 13860 x 100
Bibliography: * Cram, 2011, Ratio analysis; concept and limitations, college-cram, viewed on 26/11/11,, < http://www.college-cram.com/study/finance/weblog/ratio-analysis-concept-and-limitations/> * Investing invest, n.d., Limitations of ratios/disadvantages of using ratios in making investment decisions, viewed on 1/12/11, < http://investinginvest.hubpages.com/hub/LIMITATIONS-OF-RATIOS> * Investopedia, n.d, Uses and Limitations of Financial Ratios, viewed on 28/11/11 < http://www.investopedia.com/exam-guide/cfa-level-1/financial-ratios/uses-limitations-ratios.asp#axzz1gGdFBZg6> * Peavler R., n.d, Limitations of Financial Ratio Analysis, Business Finance, viewed on 3/12/11, < http://bizfinance.about.com/od/financialratios/tp/limitations-financial-ratio-analysis.htm> * Pyke C, 2007, Interpreting financial ratio statements, viewed on 22/11/11, < http://www2.accaglobal.com/pubs/students/publications/student_accountant/archive/pyke0207.pdf> * Tutor2u, n.d, Drawbacks & limitations of ratio analysis, viewed on 28/11/11, < http://tutor2u.net/business/accounts/ratio_limitations.html>, * Universalteacher4u, n.d, Ratio analysis, viewed on 26/11/11 < http://www.universalteacher4u.com/cbse/xii/acctheory/ch11/page1.htm>