Financial Analysis

Financial Analysis
Final Project – Financial Analysis
Beatrice Valdez, MBA Student
Capella University
MBA 6016 Finance and Value Creation [ May 16, 2012 ]
Michael Blagg, Professor
Table of Contents Executive Summary| | 3| Historical Financial Statement Analysis: Financial Ratios| | 3–4| Balance Sheet| | 4–6| Income Statement| | 6|
Statement of Cash Flows| | 6| Pro–Forma Financial Statements| | 7| Balance Sheet Pro–Forma| | 7–8| Income Statement Pro–Forma| | 9| Cash Flow
Pro–Forma| | 9–10| Investing Activities| | 11| Financial Activities| | 11| Equations of Statements| | 11
–12| Summary of Valuation| | 12–14| Current and
Quick Ratios| | 14–15| Transparency| | 15–16|...show more content...
For 2010, the same was used for 2011 amount with 2009 and 2010 average. Urban Outfitter ratios compared to industry ratios were pretty much close
with the exception of Receivables Turnover (61.16 vs. 54.24), Accounts Payable Turnover (15.26 vs. 6.43), Operating Profit Margin, 15.62 vs. 6.24),
Return on Equity (20.94 vs. 13.11), Net Profit Margin (10.75 vs. 3.77). and Return on Assets (15.92 vs. 7.17). The ratios for Urban Outfitters was
significantly larger than the average industry ratios mainly in the profitability section (See Appendix G).
Balance Sheet
"The purpose of the balance sheet is to report the financial position (amount of assets, liabilities, and stockholders' equity) of an accounting entity at a
particular point in time" (Libby, Libby & Short, 2011). The information on the Balance Sheet will help managers, investors, and lenders to
analyze the company's financial capabilities. The report is only written at the end of the year and does not provide prior financial information.
Therefore, the Balance Sheet should also include the other financial reports required to view the company as a whole. The Balance Sheet can also be
a useful tool to analyze trends of accounts receivables and payables. The formula for the Balance Sheet is:
Get more content on HelpWriting.net

Financial Ratio Analysis Essay
Investors and other external users of financial information will often need to measure the performance and financial health of an organization. This is
done in order to evaluate the success of the business, determine any weaknesses of the business, compare current and past performance, and compare
current performance with industry standards. Financially stable organizations are desirable, because a financially stable business is one that
successfully ensures its ability to generate income for investors and retain or increase value.
There are many different methods that can be used alone or together to help investors assess the financial stability of an organization. One of the most
common methods is financial ratio analysis. The basic...show more content...
This ratio is used to determine the amount of net profit for each dollar of sales that remains after subtracting all expenses. Example: a net profit
margin of 0.084 indicates that 8.4% of each sales dollar remains after all expenses are paid.
The ROA ratio is calculated by taking the net earnings available to common stockholders (net income) and dividing it by total assets. This ratio is
used to determine the amount of income each dollar of assets generates. Example: an ROA ratio of 0.0568 indicates that each dollar of company assets
produced income of almost $0.06.
The ROE ratio is calculated by taking the net earnings available to common stockholders and dividing it by common stockholders' equity. This ratio is
used to determine the amount of income produced for each dollar that common stockholders have invested. Example: An ROE ratio of 0.0869 indicates
that the company returned 8.69% for every dollar invested by common stockholders.
Liquidity Ratios
Liquidity ratios measure the organizations ability to meet short–term obligations. These include the current ratio and the quick ratio.
The current ratio is calculated by taking the total amount of current assets and dividing it by the total amount of current liabilities. This ratio is used to
determine whether the company has a sufficient amount of current assets to pay off current liabilities. Example: a current ratio of 2.57

Financial Analysis Essay
Is the Industry's Analyst Research Useful for Investment Decisions?
The primary role of the research analysts is to study the publicly traded companies and pass recommendations based on their financial securities, future
growth potentials, and profit generation potentials. These recommendations influence economic activities in the contemporary industries. For instance,
such recommendations can affect stock prices, especially if they are broadcasted to a large population. People's decisions to purchase a company's
stocks depend on the information that the research analysts provide regarding its securities and potentials. Renowned analysts can facilitate the rise or
fall of stock prices of a given company just by a mere mention of its...show more content...
Biases tend to misinform the decisions taken by investors in any industry, thus leading to a mass loss of financial resources. For instance, most financial
analysts tend to link the 2000 – 2001 stock market downturn to biased analysts research (Guan, Wu & Long, 2012). The stock market downturn led to
substantial investor losses during the same period (Guan et al., 2012). Since then, the major players in the business community such as the investors
and regulators have remained skeptic about the roles of research analysts. Specifically, they have suspected that research analysts tend to advance bases
to gain investment banking from the companies that command their interests (Guan et al., 2012). These trends prompted the regulatory commission to
adopt a set of ethical guidelines in 2000 to improve the roles of research analysts and restore the confidence of investors.
Several regulatory policies followed in 2003. One of the notable implementation of these reforms occurred in 2003 when the SEC imposed enforced
policies on the prominent investment banks in the United States (Guan et al., 2012). These changes aimed the investment research industry, especially
the compensation of the research analysts and the structure of the related operations. However, investors are still skeptic regarding the credibility of the
processes amidst the enforced reforms. The investment banking businesses incentives are just one of the

Essay about Analysis of Financial Statement
To determine Panorama's financial positions, we need to use ratio analysis. There are four main categories we can use. They are liquidity, activity,
profitability, and debt or financial leverage.
The first category Panorama needs to look at is liquidity. This is measured in three different ways. Working capital, current ratio and the acid
–test ratio.
Working capital can be described as a company's current assets minus its current liabilities. Panorama's working capital would be $833.89. The
second is the current ratio in which we would find by taking a company's assets divided by its current liabilities. In this case Panorama had current
assets of $1808.89 and current liabilities of $975.00. A company's current ratio is very important in...show more content...
The higher the turnover, the better the company.
Profitability measures are used to determine return on investment and the return on equity. Price/Earnings ratio is another way to measure a
company's profitability by dividing the market price of a common share of stock by the earnings per share. The P/E ratio tells us the value of a
company's common stock. Dividend pawet ratio and the dividend yield are some other ways to judge a company's profitability. Debt, or financial
leverage is the last category of ratio analysis used to find the financial condition of a company.
Debt, or financial leverage is the last category of ration analysis used to find the financial condition of a company. Leverage adds risk to the
operation of a company because a highly leveraged company would be at a greater risk for bankruptcy than a company that was not. Debt and
preferred stock provided good leverage for a company because the interest rate is at a fixed rate. There are two financial leverage measures used to
tell whether a company is using financial leverage. Debt ratio is the total liabilities to the total of liabilities and owners equity whereas the debt/equity
ratio is the ratio of total liabilities to total owner's equity. Both of these measures are the same concept but just stated in a different manner.
In conclusion, from looking at Panorama's financial statement and using

Financial Analysis of Carrefour Essay
Chapter 5 Carrefour S.A. Teaching Note Version: March 2007
Introduction The Carrefour case is a financial analysis case. Carrefour S.A. is one of the world's largest retailers. During the first half of the 2000s, the
company's share prices steadily declined, despite the fact that the company reported above–average returns on equity. Students are asked to analyze
Carrefour's financial statements and segment data to find explanations for the company's poor share price performance and to make recommendations
for the future. The discussion of the financial analysis is preceded by a discussion of Carrefour's strategy and accounting. Both the accounting analysis
and the financial analysis are affected by Carrefour's switch from French GAAP...show more content...
International growth. When large companies such as Carrefour start to obtain a dominant position in their domestic markets, they may be "forced" to
expand overseas or enter other industries. Carrefour's corporate strategy is to expand overseas rather than diversify. More importantly, as indicated
above, achieving growth is an essential part of Carrefour's strategy because (international) growth helps the company to obtain economies of scale in
purchasing, logistics and the development of Carrefourbranded products. For example, Carrefour sells its own branded products in the same
packaging worldwide (of course printed in different languages). The company's overseas retailing operations are, however, more risky than its
domestic operations. First, to some extent retailing remains a local business because consumers' tastes differ substantially across countries. Profitable
expansion outside Carrefour's domestic market is only possible if the company has good knowledge about local customers' preferences and tastes.
Consequently, a slightly safer way to expand abroad is to acquire local supermarket chains. A disadvantage of this strategy is, however, that acquisition
premiums have to be paid, which can also drive down profits. Second, many of Carrefour's "intercontinental" hypermarkets are located in countries
where the economic environment is risky: consumers in economically less developed countries are likely to be more price sensitive; East Asian

however, Poland, Switzerland, Netherlands, Scandinavia, Italy and Hungary were offset by turn down otherwise it would have been increased more by
ВЈ119 million or 16% whereas, the volumes rose 6% to 130 billion. Profit in Eastern Europe has fallen by ВЈ59 million to ВЈ409 million due to lower
volumes by 4% than previous year. Russia, Uzbekistan, Ukraine and Romania were mainly had lower performance. In Africa and Middle East, the
profit has increased by ВЈ211 million to ВЈ724 million where it could have been increased by 28%. Falling Revenues from Major Operating
Segments: Revenue excluding duty, excise and various taxes, was ВЈ10,768 million during 2004 and has declined to ВЈ9,325 million in 2005,
however, again rose to ВЈ9,762, ВЈ10,018 and...show more content...
BAT along with China Eastern Investments Corporation founded a factory where 100 billion of cigarettes are being manufactured annually. The
business also distributes and sells its own products across China. Rising Popularity of Smokeless Tobacco: BAT was first to introduce smokeless
Swedish–style Snus, comparatively less harmful than cigarettes. Snus is such kind of innovations that facilitate to lessen influence of tobacco on
community and has begun its journey since 2005. Profit from Snus in the global market is estimated around ВЈ2 billion in where America itself
accounts for 65% then comes Sweden with ВЈ480 million. Other markets in South Africa, Pakistan, India, Algeria, Norway and European regions
have tradition of strong smokeless tobacco and hence BAT growing opportunity. Threats: Increasing Health Concerns: Due to smoking people face
heart and respiratory problems and therefore the consumption of tobacco products are declining in huge numbers as people are getting conscious
about their health. Even passive smokers often have certain ailments. Tobacco companies are often taken to court by people for disciplinary or
compensation. BAT also encountered with such kind of incidences, which might be a major cause for declination of revenues. Competitor Strategies:
Most leading tobacco producers are subject to pending legal actions, valued billions of dollars, whereas small producers are there as

UNIVERSITY OF PORTSMOUTH| Report for Primark's IPO purposes| Financial Analysis Assignment| | Student ID: 635281, 636484, 640073| 11/28
/2011| | ––––––––––––––––––––––––––––––––––––––––––––––––– Table of Contents I.Introduction4 II.Primark's business and financial situation5
2.1.Primark's business and financial analysis5 2.1.1.Business analysis5 2.1.2.Financial situation (trend analysis)6 2.2.Industry sector11
2.2.1.Overview11 2.2.2.Cross–sectional analysis12 2.2.3.Summary of Primark's strength and weakness16 III.Financial ranking and forecast17
3.1.Financial ranking17 3.2.Forecasted 2011 post tax profit18 IV.Corporate Governance Structure20...show more content...
Finally, the last section is the conclusion, which summarizes the report and evaluate of the techniques applied in the analysis. II. Primark's business
and financial situation 2. 3.1. Primark's business and financial analysis 3.2.1. Business analysis Chesbrough (2006) suggested that Business model
emphasizes how business can use technological potential to create economic value and suggested that its main functions are: value proposition,
market segment, value chain, cost structure and target margin, value network, competitive strategy. According to a case study of Primark (The
Times 100, 2010), the business model which is based on "high sales volumes" and "lower retail margins" with minimal advertising enables Primark
to offer value and low price products. The economies of scales resulting by buying large quantity of items help Primark to keep costs down.
Moreover, retails prices are kept at considerably low level through "lean operation" and efficient operational practices (e.g. off–season factory time, flat
management structure, effectiveness of distribution network and supply chain). This business model has created and enhanced Primark's competitive
advantage which is the vital key to survive and grow in its industry sector. 3.2.2. Financial situation (trend analysis) In recent years, thanks to meeting
customers' need and expanding stores, Primark has grown rapidly year by year [ (The Times 100) ].

Financial Ratio Analysis Essay
Before beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that
historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information
contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This
document will use a variety of these ratios to analyze the firm, Sample Company, as of December 31,2000. Financial Statement Ratios Profitability
Ratios The ratios returns on investment (ROI) and return on equity (ROE) are two of the most popular measure of profitability of a company and, along
...show more content...
In general, the average ROI for American merchandising companies is between 8% and 12% when using net income, and average margin is 5% to
10%. When using operating income it is between 10 and 15% and average margin is also 10% – 15%. Asset turnover is another important component
of the DuPont model and is usually in the range of 1% to 1.5% ROE В– Return on Equity The return on equity conveys the profits of the company as a
rate of return on the amount of owners' equity. ROE uses average owners equity over the specified time period and net income. Historically a ROE of
between 10% and 15% were considered average. Recently higher rates in growth industries have been greater. Price earnings ratio (P/E) In general, the
higher the ROI and rate of earnings growth, the higher the P/E. . In the past, for a very long period of time P/E ratios in the range of 12 to 18 were
consider good P/E ratios for a company. In recent years, the 12 to 18 values have been abandoned as a norm and what can be considered the norm now
is under debate. Sample Companies' Profitability Ratios ROI for Sample CO. is $350 / $7,196 = 4.8% using net income. If operating Income is used
we have $498 / $7,196 = 6.9%. An additional measure used for ROI is the DuPont Model. The DuPont model figures are ($498 / $8,251) * ($8,251
/ $7,196) = 6.0% using operating income. These are somewhat low when compared to the average. ROE is $350 / $3,357 = 10.4% and is also below

Financial Analysis

Recommended

Recommended

More Related Content

Similar to Financial Analysis

Similar to Financial Analysis (20)

Recently uploaded

Recently uploaded (20)

Financial Analysis