RATIO ANALYSIS OF NOKIA

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RATIO ANALYSIS OF NOKIA

  1. 1. Dedication<br />I dedicating my valuable project to our parents, Prof’s, friends and to the whole class.<br />Acknowledgement<br />I thank to our Allah AL-Mighty and off course thankful to our honorable teacher who has always been guiding us in a good way through understanding this course as well as the whole project. He has given us an opportunity to show abilities in the subject. I also like to thank our class mates because of their friendly attitude and maintaining lovely environment in the class. <br />Income statement<br />Period EndingSep 30, 2009Sep 30, 2008Sep 30, 2007AssetsCurrent AssetsCash And Cash Equivalents74,591  14,899  52,746  Short Term Investments-  57,210  31,057  Net Receivables150,046  198,959  177,669  Inventory117,318  231,479  163,196  Other Current Assets26,828  59,361  42,667  Total Current Assets 368,783   561,908   467,335   Long Term Investments44,973  43,314  45,436  Property Plant and Equipment859,990  826,990  805,064  Goodwill-  -  33,595  Intangible Assets-  -  -  Accumulated Amortization-  -  -  Other Assets482,999  340,443  289,723  Deferred Long Term Asset Charges5,273  -  -  Total Assets 1,762,018   1,772,655   1,641,153   LiabilitiesCurrent LiabilitiesAccounts Payable141,168  454,775  401,051  Short/Current Long Term Debt129,800  160  40,160  Other Current Liabilities28,172  24,269  32,454  Total Current Liabilities 299,140   479,204   473,665   Long Term Debt389,240  389,181  355,522  Other Liabilities300,412  194,563  157,946  Deferred Long Term Liability Charges256,196  222,761  225,068  Minority Interest-  -  -  Negative Goodwill-  -  -  Total Liabilities 1,244,988   1,285,709   1,212,201   Stockholders' EquityMisc Stocks Options Warrants-  -  -  Redeemable Preferred Stock-  -  627  Preferred Stock-  467  -  Common Stock517,030  21,993  21,646  Retained Earnings-  312,808  268,761  Treasury Stock-  -  -  Capital Surplus-  147,241  136,061  Other Stockholder Equity-  4,437  1,857  Total Stockholder Equity 517,030   486,946   428,325   Net Tangible Assets $517,030   $486,946   $394,730  <br />Period EndingSep 30, 2009Sep 30, 2008Sep 30, 2007Total Revenue 1,895,198   2,208,973   2,021,594   Cost of Revenue27,818  1,962,870  797,924  Gross Profit 1,867,380   246,103   1,223,670   Operating ExpensesResearch Development-  -  -  Selling General and Administrative1,705,565  99,453  1,084,324  Non Recurring-  -  -  Others36,751  35,303  34,080  Total Operating Expenses-  -  -  Operating Income or Loss 125,064   111,347   105,266   Income from Continuing OperationsTotal Other Income/Expenses Net1,453  1,881  6,812  Earnings Before Interest And Taxes126,517  113,228  112,078  Interest Expense29,746  29,477  37,229  Income Before Tax96,771  83,751  74,849  Income Tax Expense32,509  26,190  25,035  Minority Interest-  (35)(43)Net Income From Continuing Ops64,247  57,526  49,771  Non-recurring EventsDiscontinued Operations-  20,396  -  Extraordinary Items-  -  -  Effect Of Accounting Changes-  -  -  Other Items-  -  -  Net Income 64,247   77,922   49,771   Preferred Stock And Other Adjustments(15)-  -  Net Income Applicable To Common Shares $64,232   $77,922   $49,771   <br />Ratio Analysis<br />Liquidity Ratio:<br /><ul><li>20082009Current Ratio:Current Ratio=CurrentAssetsCurrent Liability Current Ratio=$561,908   $479,204      Current Ratio:Current Ratio=CurrentAssetsCurrent Liability Current Ratio=$368,783   $299,140   Current Ratio=1.17%Current Ratio=1.23%</li></ul>Interpretation:<br />Current ratio measures whether or not a company has enough resources to pay its debt over the next business cycle. The higher the current ratio is, the more capable the company is to pay its obligations. In 2009 current ratio is comparatively below than the previous year. In 2009 current liabilities exceed current assets. This shows that the company may have problems paying its bills on time.<br /><ul><li>20082009Quick Ratio:Quick Ratio=CurrentAssets-InventoryCurrent Liability Quick Ratio=$561,908   -$231,479  $479,204   Quick Ratio:Quick Ratio=CurrentAssets-InventoryCurrent Liability Quick Ratio=$368,783   -$117,318    $299,140   Quick Ratio=0.68%Quick Ratio=0.84%</li></ul>Interpretation:<br />Quick Ratio is also known as the " acid test" ratio; it is a refinement of the current ratio and is a more conservative measure of liquidity. The ratio expresses the degree to which a company's current liabilities are covered by the most liquid current assets. The quick ratio is incresing from previous year. It seems that company caring asses liabilities.<br /> <br />Profitability Ratio:<br /><ul><li>20082009Gross Profit Margin:Gross Profit Margin=Gross ProfitNet Sale×100Gross Profit Margin=$246,103   $2,208,973   ×100Gross Profit Margin:Gross Profit Margin=Gross ProfitNet Sale×100 Gross Profit Margin=$1,867,380   $1,895,198   ×100Gross Profit Margin=11.14%Gross Profit Margin=98.53%</li></ul>Interpretation:<br />Gross profit margin measures company's manufacturing and distribution efficiency during the production process. Gross profit increases from 2008 to 2009 .The cost of goods sold slightly increase as compare to previous..<br /><ul><li>20082009Operating Profit Margin:Operating Profit Margin=Operating ProfitNet Sale×100Operating Profit Margin=$111,347   $2,208,973   ×100Operating Profit Margin:Operating Profit Margin=Operating ProfitNet Sale×100 Operating Profit Margin=$125,064   $1,895,198   ×100Operating Profit Margin=5.04%Operating Profit Margin=6.60%</li></ul>Interpretation:<br />Operating margin is used to measure company's pricing strategy and operating efficiency. Operating profit is increasing as compare to previous year. It shows that the company is earning more on per dollar of Sale. This high profit also shows that sales are increasing faster than cost and the firm is in a relatively liquid position. <br /><ul><li>20082009Net Profit Margin:Net Profit Margin=Net Profit After TaxNet Sale×100 Net Profit Margin=$77,922   $2,208,973   ×100Net Profit Margin:Net Profit Margin=Net Profit After TaxNet Sale×100 Net Profit Margin=$64,247 1,895,198   ×100Net Profit Margin=3.52%Net Profit Margin=3.38%</li></ul>Interpretation:<br />There is little bit decrease in the net profit margin which is a good sign of company efficiency and also shows that company reduces its expense. Increase in net profit also indicates that company efficiently converts its revenue into actual profit.<br /><ul><li>20082009Return on Total Assets:Return on Total Assets=Net Profit After TaxTotal Assets×100Return on Total Assets=$77,922$1,772,655   ×100Return on Total Assets:Return on Total Assets=Net Profit After TaxTotal Assets×100 Return on Total Assets=$64,247 $1,762,018   2×100Return on Total Assets=4.39%Return on Total Assets=3.64%</li></ul>Interpretation:<br />Return on Assets shows how many dollars of earnings result from each dollar of assets the company controls. Return on total assets decrease from 4.39% to 3.64% which indicate that company is not efficiently use its assets to generate profit.<br /><ul><li>20082009Return on Total Equity:Return on Total Equity=Net Profit After TaxTotal Equity×100Return on Total Equity=$77,922$486,946   ×100Return on Total Equity:Return on Total Equity=Net Profit After TaxTotal Equity×100 Return on Total Equity=$64,247 $517,030   ×100Return on Total Equity=16.00%Return on Total Equity=12.43%</li></ul>Interpretation:<br />Return on Equity is also referred as Stockholder's return on investment, it tells the rate that shareholders are earning on their shares. LG is earning a very low on shareholder's equity as compare to the previous year. It shows the weakness of company.. <br />Debt Ratio:<br /><ul><li>20082009Time Interest Earned Ratio:Time Interest Earned Ratio=EBITInterestTime Interest Earned Ratio=$111,347   $29,477  Time Interest Earned Ratio:Time Interest Earned Ratio=EBITInterest Time Interest Earned Ratio=$125,064   $29,746  Time Interest Earned Ratio=3.77 TimesTime Interest Earned Ratio=4.20 Times</li></ul>Interpretation:<br />Time interest earned ratio also known as interest coverage ratio. Times Interest Earned is a great tool to measure a company's ability to meet its debt obligations. In 2009 there is a increase from 3.77 times to 4.20 times. It shows that the company has generating enough cash from its operations EBIT to meet its interest obligations. <br /><ul><li>20082009Debt Ratio:Debt Ratio=Total DebtTotal Assets×100Debt Ratio=$38,9341$1,772,655   ×100Debt Ratio:Debt Ratio=Total DebtTotal Assets×100 Debt Ratio=$51,9040$1,762,018   ×100Debt Ratio=21.96%Debt Ratio=29.45%</li></ul>Interpretation:<br />This ratio expresses the relationship between capital contributed by creditors and that contributed by owners. It expresses the degree of protection provided by the owners for the creditors. The debt ratio in 2009 seems to increasing as compare to previous year show that company increase their debt. It is the weakness of company..<br /><ul><li>20082009Debt to Equity Ratio:Debt to Equity Ratio=Long Term DebtTotal EquityDebt to Equity Ratio=$389,181  $486,946   Debt to Equity Ratio:Debt to Equity Ratio=Long Term DebtTotal Equity Debt to Equity Ratio=$389,240  $517,030Debt Ratio=0.79%Debt Ratio=0.75%</li></ul>Interpretation:<br />There is a bit fall fall in debt to equity ratio as compare to previous year. It is the strength of company.<br />Activity Ratio:<br /><ul><li>20082009Average Age of Inventory:Average Age of Inventory=No.of Days In YearInventory TurnoverInventory Turn Over Ratio=Cost of Goods SoldAverage InventoryAverage Inventory=$117,318  +$231,479  2Average Inventory=$174398.5Inventory Turn Over Ratio=$1,962,870 $174398.5Inventory Turn Over Ratio=11.22Average Age of Inventory=36511.22Average Age of Inventory:Average Age of Inventory=No.of Days In YearInventory Turnover Inventory Turn Over Ratio=Cost of Goods SoldAverage InventoryAverage Inventory=$117,318  +$231,4792Average Inventory=$174398.5Inventory Turn Over Ratio=$427,818  $174398.5Inventory Turn Over Ratio=2.45Average Age of Inventory=3652.45Average Age of Inventory=32.53daysAverage Age of Inventory=148 days</li></ul>Interpretation:<br />Average age of inventory is the average number of days it takes for a company to sell a product. In 2009 average age of inventory increasing . It shows that firm is not properly managing its inventory and it also the strength of company.<br /><ul><li>20082009Average Collection Period:Average Collection Period=No.of days in yearA/R turnover ratioA/R Turnover ratio=Net SaleAccounts ReceivableAccount Receivable turnover ratio=$2,208,973   $198,959  Account Receivable turnover ratio=11Average Collection Period=36511Average Collection Period:Average Collection Period=No.of days in yearA/R turnover ratio A/R Turnover ratio=Net SaleAccounts ReceivableAR turnover ratio=$,895,198   $150,046    Account Receivable turnover ratio=6Average Collection Period=3656Average Collection Period=33.18 DaysAverage Collection Period=60 days</li></ul>Interpretation:<br />The average collection period ratio represents the average number of days for which a firm has to wait before its receivables are converted into cash. Average collection period is very bad because previously we receive collection in 33.18 days and in current year we are receiving collection in 60 days. It is also the weakness of company and it also show the management of company is not good. <br /><ul><li>20082009Average Payment Period:Average Payment Period=No.of days in yearA/P turnover ratioA/P Turnover ratio=Net SaleAccounts PayableAccount Payable turnover ratio=$2,208,973   $454,775  Account Payable turnover ratio=4.85Average Collection Period=3654.85Average Payment Period:Average Payment Period=No.of days in yearA/P turnover ratio A/P Turnover ratio=Net SaleAccounts PayableAccount Payable turnover ratio=$1,895,198   $141,168  Account Payable turnover ratio=13.42Average Collection Period=36513.42Average Payment Period=75.25 DaysAverage Payment Period=27.19 Days</li></ul>Interpretation:<br />Average payment period ratio represents the average number of days taken by the firm to pay its creditors. Average payment period is very bad because previously we are paying collection in 75.25 days but in current year we are paying collection in 27.19 days .<br />nokia<br />View: Annual Data | Quarterly DataAll numbers in thousandsPeriod EndingDec 31, 2009Dec 31, 2008Dec 31, 2007Total Revenue 58,802,000   71,485,887   75,203,328   Cost of Revenue39,772,000  46,995,169  49,716,267  Gross Profit 19,031,000   24,490,718   25,487,062   Operating ExpensesResearch Development8,478,000  8,413,090  8,317,466  Selling General and Administrative7,533,000  9,077,058  5,408,489  Non Recurring1,303,000  -  -  Others-  -  -  Total Operating Expenses-  -  -  Operating Income or Loss 1,717,000   7,000,570   11,761,107   Income from Continuing OperationsTotal Other Income/Expenses Net(337,000)266,433  480,165  Earnings Before Interest And Taxes1,380,000  7,267,004  12,241,272  Interest Expense-  260,795  63,335  Income Before Tax1,380,000  7,006,209  12,177,937  Income Tax Expense1,007,000  1,523,886  2,241,754  Minority Interest-  139,560  676,061  Net Income From Continuing Ops373,000  5,621,884  10,612,245  Non-recurring EventsDiscontinued Operations-  -  -  Extraordinary Items-  -  -  Effect Of Accounting Changes-  -  -  Other Items-  -  -  Net Income 373,000   5,621,884   10,612,245   Preferred Stock And Other Adjustments-  -  -  Net Income Applicable To Common Shares $373,000   $5,621,884   $10,612,245<br />View: Annual Data | Quarterly DataAll numbers in thousandsPeriod EndingDec 31, 2009Dec 31, 2008Dec 31, 2007AssetsCurrent AssetsCash And Cash Equivalents1,639,000  2,404,948  3,129,913  Short Term Investments11,092,000  7,209,206  14,181,081  Net Receivables11,471,000  13,455,587  16,726,252  Inventory2,676,000  3,570,770  4,236,060  Other Current Assets7,002,000  7,854,848  4,873,826  Total Current Assets 33,879,000   34,495,359   43,147,133   Long Term Investments960,000  895,160  995,680  Property Plant and Equipment2,679,000  2,946,273  2,816,185  Goodwill7,419,000  8,820,493  2,038,494  Intangible Assets3,963,000  5,860,123  4,029,854  Accumulated Amortization-  -  -  Other Assets214,000  14,097  64,808  Deferred Long Term Asset Charges2,162,000  2,767,241  2,287,414  Total Assets 51,276,000   55,798,745   55,379,567   LiabilitiesCurrent LiabilitiesAccounts Payable16,434,000  17,266,006  20,897,505  Short/Current Long Term Debt1,106,000  5,062,233  1,577,476  Other Current Liabilities4,251,000  6,366,205  5,474,769  Total Current Liabilities 21,791,000   28,694,444   27,949,750   Long Term Debt-  -  -  Other Liabilities6,454,000  1,311,021  474,274  Deferred Long Term Liability Charges1,869,000  2,519,134  1,418,403  Minority Interest2,383,000  3,245,129  3,777,989  Negative Goodwill-  -  -  Total Liabilities 30,114,000   35,769,728   33,620,415   Stockholders' EquityMisc Stocks Options Warrants-  -  -  Redeemable Preferred Stock-  -  -  Preferred Stock-  -  -  Common Stock353,000  346,786  362,333  Retained Earnings14,537,000  16,482,212  20,429,123  Treasury Stock(977,000)(2,651,646)(4,633,743)Capital Surplus400,000  623,087  948,548  Other Stockholder Equity4,465,000  5,228,577  4,652,891  Total Stockholder Equity 18,778,000   20,029,018   21,759,152   Net Tangible Assets $7,396,000   $5,348,402   $15,690,804<br />Ratio Analysis<br />Liquidity Ratio:<br /><ul><li>20082009Current Ratio:Current Ratio=CurrentAssetsCurrent Liability Current Ratio=$34,495,359   $28,694,444   Current Ratio:Current Ratio=CurrentAssetsCurrent Liability Current Ratio=$33,879,000   $21,791,000   Current Ratio=1.20%Current Ratio=1.55%</li></ul>Interpretation:<br />Current ratio measures whether or not a company has enough resources to pay its debt over the next business cycle. In 2009 current ratio is comparatively above than the previous year. In 2009 current assets exceed Current liabilities. This shows that the company is capable to pay its obligations.<br /><ul><li>20082009Quick Ratio:Quick Ratio=CurrentAssets-InventoryCurrent Liability Quick Ratio=$34,495,359-$3,570,770  $28,694,444Quick Ratio:Quick Ratio=CurrentAssets-InventoryCurrent Liability Quick Ratio=$33,879,000 -$2,676,000  $21,791,000Quick Ratio=1.07%Quick Ratio=1.43%</li></ul>Interpretation:<br />Quick Ratio is also known as the " acid test" ratio; it is a refinement of the current ratio and is a more conservative measure of liquidity. The ratio expresses the degree to which a company's current liabilities are covered by the most liquid current assets. There is a slightly increase in the quick ratio as compare to previous year. This indicates that the company relies too much on inventory or other assets to pay its short-term liabilities.<br /> <br />Profitability Ratio:<br /><ul><li>20082009Gross Profit Margin:Gross Profit Margin=Gross ProfitNet Sale×100Gross Profit Margin=$24,490,718   $71,485,887×100Gross Profit Margin:Gross Profit Margin=Gross ProfitNet Sale×100 Gross Profit Margin=$19,031,000   $58,802,000   ×100Gross Profit Margin=34.25%Gross Profit Margin=32.36%</li></ul>Interpretation:<br />Gross profit margin measures company's manufacturing and distribution efficiency during the production process. Gross profit decrease in 2009 as compare to 2008. Which is not better than previous year.<br /><ul><li>20082009Operating Profit Margin:Operating Profit Margin=Operating ProfitNet Sale×100Operating Profit Margin=$7,000,570   $71,485,887   ×100Operating Profit Margin:Operating Profit Margin=Operating ProfitNet Sale×100 Operating Profit Margin=$1,717,000   $58,802,000×100Operating Profit Margin=9.79%Operating Profit Margin=2.91%</li></ul>Interpretation: <br />Operating profit margin is used to measure company's pricing strategy and operating efficiency. In operating profit margin there is a great change as compare to previous year. Operating profit decreases. It shows that the company is earning less as compare to previous years..<br /><ul><li>20082009Net Profit Margin:Net Profit Margin=Net Profit After TaxNet Sale×100 Net Profit Margin=$5,621,884  $71,485,887×100Net Profit Margin:Net Profit Margin=Net Profit After TaxNet Sale×100 Net Profit Margin=$373,000  $58,802,000×100Net Profit Margin=7.86%Net Profit Margin=0.63%</li></ul>Interpretation:<br />Net profit margin measures how much of each dollar earned by the company is translated into profits. Net profit margin provides clues to the company's pricing policies, cost structure and production efficiency. There is huge decrease in the net profit margin than previous year. It shows that company in bad condition..<br /><ul><li>20082009Return on Total Assets:Return on Total Assets=Net Profit After TaxTotal Assets×100Return on Total Assets=$5,621,884 $55,798,745   ×100Return on Total Assets:Return on Total Assets=Net Profit After TaxTotal Assets×100 Return on Total Assets=$373,000 $51,276,000   ×100Return on Total Assets=10.07%Return on Total Assets=0.72%</li></ul>Interpretation:<br />Return on Assets shows how many dollars of earnings result from each dollar of assets the company controls. Return on total assets decrease from 10.07% to 0.72% and this is big change which indicate that company is not doing well.<br /><ul><li>20082009Return on Total Equity:Return on Total Equity=Net Profit After TaxTotal Equity×100Return on Total Equity=$5,621,884 $20,029,018 ×100Return on Total Equity:Return on Total Equity=Net Profit After TaxTotal Equity×100 Return on Total Equity=$373,000 $18,778,000×100Return on Total Equity=28.06%Return on Total Equity=1.98%</li></ul>Interpretation:<br />Return on Equity is also referred as Stockholder's return on investment, it tells the rate that shareholders are earning on their shares. Nokia is earning 1.98% on shareholder's equity as compare to the previous year. It indicates the weakness of company. <br />Debt Ratio:<br /><ul><li>20082009Time Interest Earned Ratio:Time Interest Earned Ratio=EBITInterestTime Interest Earned Ratio=$7,267,004  $400355Time Interest Earned Ratio:Time Interest Earned Ratio=EBITInterest Time Interest Earned Ratio=1,380,000  0Time Interest Earned Ratio=18.15 TimesNOTE.Not interest avilable in 2009</li></ul>Interpretation:<br />Time interest earned ratio also known as interest coverage ratio. Times Interest Earned is a great tool to measure a company's ability to meet its debt obligations. In 2009 there is increase from 0.30 to 3.24%. It shows that the company is able to meet its interest obligations because earnings are significantly greater than annual interest obligations. <br /><ul><li>20082009Debt Ratio:Debt Ratio=Total DebtTotal Assets×100Debt Ratio=$5,062,233  $55,798,745   ×100Debt Ratio:Debt Ratio=Total DebtTotal Assets×100 Debt Ratio=$1,106,00051,276,000   ×100Debt Ratio=9.07%Debt Ratio=2.15%</li></ul>Interpretation:<br />This ratio expresses the relationship between capital contributed by creditors and that contributed by owners. It expresses the degree of protection provided by the owners for the creditors. The debt ratio in 2009 seems to be slightly decreased as compare to previous year and tis is not good sign for Nokia company.This ratio indicates that company increases their debt. <br /><ul><li>20082009Debt to Equity Ratio:Debt to Equity Ratio=Long Term DebtTotal EquityDebt to Equity Ratio=5,062,233  $20,029,018   Debt to Equity Ratio:Debt to Equity Ratio=Long Term DebtTotal Equity Debt to Equity Ratio=1,106,000  $18,778,000Debt Ratio=0.25%Debt Ratio=0.05%</li></ul>Interpretation:<br />Debt to equity ratio seems to be decrease as compare to previous years.. this indicates that company has no financed its growth mostly via debt.<br />Activity Ratio:<br /><ul><li>20082009Average Age of Inventory:Average Age of Inventory=No.of Days In YearInventory TurnoverInventory Turn Over Ratio=Cost of Goods SoldAverage InventoryAverage Inventory=$2,676,000  Inventory Turn Over Ratio=$71,485,887   $2,676,000Inventory Turn Over Ratio=26.71Average Age of Inventory=36526.71Average Age of Inventory:Average Age of Inventory=No.of Days In YearInventory Turnover Inventory Turn Over Ratio=Cost of Goods SoldAverage InventoryAverage Inventory=$2,676,000Inventory Turn Over Ratio=$58,802,000   $2,676,000Inventory Turn Over Ratio=21Average Age of Inventory=36521Average Age of Inventory=13.66 daysAverage Age of Inventory=17.3 days</li></ul>Interpretation:<br />Average age of inventory is the average number of days it takes for a company to sell a product. In 2009 average age of inventory increase.. It shows that firm is not properly managing its inventory and it also the strength of company.<br /><ul><li>20082009Average Collection Period:Average Collection Period=No.of days in yearA/R turnover ratioA/R Turnover ratio=Net SaleAccounts ReceivableAR turnover ratio=$71,485,887   $13,455,587  Account Receivable turnover ratio=5.31Average Collection Period=3655.31Average Collection Period:Average Collection Period=No.of days in yearA/R turnover ratio A/R Turnover ratio=Net SaleAccounts ReceivableAR turnover ratio=$58,802,000   $11,471,000  Account Receivable turnover ratio=5.13Average Collection Period=3655.13Average Collection Period=68.73 DaysAverage Collection Period=71.15 Days</li></ul>Interpretation:<br />The average collection period ratio represents the average number of days for which a firm has to wait before its receivables are converted into cash. Average collection period is no good because previously we receive collection in 68.73 days and in current year we are receiving collection in 71.15 days. It is also the weakness of company.<br /><ul><li>20082009Average Payment Period:Average Payment Period=No.of days in yearA/P turnover ratioA/P Turnover ratio=Net SaleAccounts PayableAccount Payable turnover ratio=$71,485,887 $17,266,006  Account Payable turnover ratio=4.14Average Collection Period=3654.14Average Payment Period:Average Payment Period=No.of days in yearA/P turnover ratio A/P Turnover ratio=Net SaleAccounts PayableAccount Payable turnover ratio=$58,802,000   $16,434,000Account Payable turnover ratio=3.57Average Collection Period=3653.57Average Payment Period=88.14 DaysAverage Collection Period=102.24 Days</li></ul>Interpretation:<br />Average payment period ratio represents the average number of days taken by the firm to pay its creditors. Average payment period is very good because previously we are paying collection in 88.14days but in current year we are paying collection in 102.24 days. It shows that management of company is quite good.<br />Conclusion<br />I have calculated the ratio of LG and Nokia from this i understands the strength and weakness of both company. The main purpose of this project is to how to invest in a company. Which factors is important for investor while investing in any company. A financial Ratio analysis also tells us that which companies it better or profitable. I take the decision of investment on following ratios such as net profit, return on total assets, return on total equity and debt ratio. The comparison of net profit of both company shows that LG has greater profit than Nokia. Return on total asset is also better of LG as compare to Nokia. Return on total equity of is not good for 2009.. It is clear that LG pay more dividends to stockholders of a company. <br />

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