FINANCIAL RATIO ANALYSIS: PAKISTAN STATE OIL Introduction: Financial ratios for PSO for last 3 years are provided below. The company represents current market share of 78.2% in the black oil market and 54.3% share in the white oil market with net sales of Rs1.02 billion in 2012‚ Rs820 million billion in 2011 and Rs742 million in 2010. Ratio Analysis: PAKISTAN STATE OIL | |2012 |2011 |2010
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ratios that have been calculated for the company ranging from 2005 to 2014. Leverage Ratios: The term “financial leverage refers to the use of debt in a firm’s capital structure” (Parrino‚ Kidwell‚ & Bates‚ 2012‚ pg. 5). The purpose of leverage ratios is to measure the ability for a company to meet its long term financial debts and identify the extent of using debt over equity. In other words‚ leverage ratios indicate the level of debt and ability to pay off these debts. This information
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predictable industry and therefore can afford to use more financial leverage than an automobile company‚ which is generally subject to the influences of the business cycle. An automobile manufacturer may not be able to service a large amount of debt when there is a downturn in the economy. 3. A labour-intensive company will have low fixed costs and a correspondingly low break-even point. However‚ the impact of operating leverage on the firm is small and there will be little magnification of profits
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Financial Reporting and Analysis UChicago Financial Mathematics 47/55 ROE and risk We mentioned already‚ that ROE can be increased by taking on more leverage. Clearly then‚ a higher ROE is not always better. Improving ROE while keeping risk exposure level is an acheivement. Increasing ROE by increasing risk‚ (leverage or other types‚) is not. Thus‚ investors must consider whether high ROE is a good deal. If your money market fund returned 10%‚ would you be happy? Hendricks
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ACCOUNTING 231 – RATIOS USED FOR ANALYSIS - Spring 2013 Explanations for each ratio‚ display format‚ type of ratio‚ and what it is used for‚ etc. General Ratios: Horizontal Analysis (Growth Rate (GR)): (Current Year – Prior Year) / Prior Year Measures change in $ numbers for one year to another. Percentage. General Used to compare same line item to itself between periods. Note 1: Can also be used to measure change in $ from Current year to Base year: CY – BY / BY Note 2: Can also be used to measure
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Part 1 of 1 - Week 1 Quiz 100.0 Points Question 1 of 25 4.0 Points The firm’s price-earnings (P/E) ratio is influenced by its A.capital structure. B.earnings volatility. C.sales‚ profit margins‚ and earnings. D.all of these. Answer Key: D Question 2 of 25 4.0 Points The primary disadvantage of accrual accounting is that A.it does not match revenues and expenses in the period in which they are incurred. B.it does not appropriately measure accounting profit
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Chapter 12 Capital Structure and Leverage LEARNING OBJECTIVES After reading this chapter‚ students should be able to: • Explain why capital structure policy involves a trade-off between risk and return‚ and list the four primary factors that influence capital structure decisions. • Distinguish between a firm’s business risk and its financial risk. • Explain how operating leverage contributes to a firm’s business risk and conduct a breakeven analysis‚ complete with
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Threat of Entry Threat of Substitutes Power of suppliers Power of Buyers Competitive Rivalry When there are large numbers of customers‚ no one customer tends to have bargaining leverage. Buying power is low-medium as Heinz products are very evenly distributed between large players in the market and small distributors. Entry barriers are law as raw materials are easily accessible‚ and there is no government policies prohibiting entry into the market Exit barriers are low: When exit barriers are
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Over the past quarter‚ our group has conducted financial research on Fortune 100 company General Electric. The history of this company dates back to 1876 when Thomas Edison invented the incandescent electric lamp in a laboratory in Menlo Park‚ New Jersey. However‚ it was not until 1892 when a merger took place between his company Edison General Electric Company and The Thompson Houston Company that General Electric Company was formed (ge.com). By 1896 the company was trading publicly on the then
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Corporate Financial Management Literature Review on Capital Structure Date: 7\12\2012 Name: Tudor Gheorghiu Student Id: 12254888 Introduction 3 Theories on Capital Structure 3 Modigliani and Miller theory on capital structure 3 Other theories relating to the firm`s capital structure 4 Trade-off theory 4 Pecking order theory 5 Agency theory 6 Choosing between theories 7 Empirical evidence 7 Developed countries: 7 Emerging markets: 9 Capital structure of privatised firms
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