the ARI (ARRIUM LIMITED) with the context of various financial ratios and to give suitable recommendation to potential new investor UNO Super fund Management. Discussion of the topic starts with the core business of the company with the all financial background. The report also summarise the way the fund generated by the company and the capital investment by the company. The nucleus of the report analyse the various financial ratio to determine the liquidity of company.
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STUDY RATIO ANALYSIS ANALYSIS OF FINANCIAL STATEMENTS The traditional financial statements that comprise of the balance sheet and profit and loss account do not give enough information related to financial operations of the company. These financial statements prepared as per the statutory requirement of law need to be analyzed in order to evaluate the past performance of the company and the future prospects. The most widely used tool is Ratio Analysis. DEFINITION OF RATIO A way of expressing
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accessible and comprehensible. This very big data overload could seem astounding. Luckily‚ many well-tested ratios out there make the task a bit less daunting. Comparative ratio analysis helps you identify and quantify of the desert hotel company ’s strengths and weaknesses‚ evaluate its financial position‚ and understand the risks you may be taking. As with any other form of analysis‚ comparative ratio techniques are not definitive. Numerous off the balance sheet and income statement factors can play
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http://www.investopedia.com/university/ratios/liquidity-measurement/default.asp LIQUIDITY RATIOS: The first ratios we’ll take a look at in this tutorial are the liquidity ratios. Liquidity ratios attempt to measure a company’s ability to pay off its short-term debt obligations. This is done by comparing a company’s most liquid assets (or‚ those that can be easily converted to cash)‚ its short-term liabilities. In general‚ the greater the coverage of liquid assets to short-term liabilities the
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Accounting ratios are relationships expressed in mathematical terms between the figures which are connected with each other in some manner. Obviously‚ no purpose is served by comparing two sets of figures which are not at all connected with each other. Moreover‚ absolute figures are also unfit for comparison. The following are the different classification of ratios: 1. Traditional classification: The traditional classification has been on the basis of the financial statement to which the determinants
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instances‚ its total investment. Financial leverage percentage= ROE-ROA 2011 2010 2009 Financial leverage percentage 1.69% 2.48% 1.22% In year 2009‚ the company have the lowest leverage ratio among the three years‚ thus it suggests that it utilizes relatively lowest debt in its capital structure this year‚ which indeed means Toyota has been investing most effectively (earning a high return on investment) or borrowing more effectively (paying
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Ratio | Industry benchmark ratio | Woolworths’ ratio | Brief Comment | Current Ratio | 1.2:1 | 0.80:1 | The current ratio ofWoolworth is considerablybelow industry average themovement from it is 33.33% (1.2-0.8)/1.2*100) Which is not really good for business | Liquid ratio | 0.7:1 | 0.34:1 | The Liquid ratio of Woolworth is considerably below industry average. The movement is 51.43 %. It is showed that the business may have problem in paying their debt.(0.7-0.34/0.7*100) | Gross Profit ratio
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Ratio and Proportion • If 2 numbers are in ratio a: b then consider them as ax and bx (where x is the proportionality constant) and apply ax and bx in the given condition of the problem to proceed for answer • Ratio can be applied between 2 units if and only if the same physical quantity is compared • Length : length is correct • Length : density is wrong • Ratio can be made only after the units are compared in the same unit • If two lengths are 1 mile and 1 km respectively then ratio
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Financial Reporting II Review of Ratio Analysis Ratio analysis is a useful tool for analyzing financial statements. Calculating ratios will aid in understanding the company’s strategy and in understanding its strengths and weaknesses relative to other companies and over time. They can sometimes be useful in identifying earnings management and in understanding the effect of accounting choices on the firm’s reported profitability and growth. Finally‚ the ratios help in obtaining a better understanding
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FINANCIAL RATIOS Gross Profit to Sales (Gross Profit Ratio): profitability ratio that shows the relationship between gross profit and total net sales revenue. Gross margin/Net sales The gross margin is not an exact estimate of the company’s pricing strategy but it does give a good indication of financial health. Without an adequate gross margin‚ a company will be unable to pay its operating and other expenses and build for the future. In general‚ a company’s gross profit margin should be stable
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