Financial Analysis of BMW: Liquidity, Profitability, Efficiency, and Gearing Ratios

Accounting and finance
analysis of a listed
company

EXECUTIVE SUMMARY
This report done the financial analysis with the help of various accounting ratios. It
further help the organization to analyse accounting information with the help of various
information. Managers of BMW company evaluate different types of ratios which effect the
business operations. So they have to develop their strategy accordingly and make sure to
maximise the production as well as profitability. With the help of financial ratios, managers able
to evaluate the efficiency as well as effectiveness.

Table of Contents
EXECUTIVE SUMMARY ............................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Accounting and financial analysis is the measurements which help the business to
organize their financial information and daily transaction. It will used for the further analysis
where management of the company develop various strategic decisions in order to achieve the
organizational goals & objectives (Loughran and McDonald, 2016). Accounting process include
the recording, summarizing, analysing and reporting which is beneficial for the owner as well as
their stakeholders for their future decisions. Financial analysis is the process of evaluating
business project, budget and the finance related activities. For the better understanding of this
concepts, this report select the BMW which is Germany based company and produce auto-
mobile & motorcycles. Company founded in 1916 by Camillo Castiglioni and in the 2015, BMW
is the world's 12th largest motor vehicle manufacturing units. This project report cover the
financial ratios of the company which help the internal as well as external parties to make
financial or strategic decisions.
MAIN BODY
Liquidity ratio:
Current ratio: It is one of the major used accounting ratio which help the organization to
meet their business obligations such as payment of suppliers, debt etc. All the required
information will be collected from balance sheet of the company which include the financial data
(Current ratio, 2019). With the help of current ratio, managers of BMW able to know about their
liquidity and pay its short term obligation to meet the operational requirements.
Formula:
Current ratio = Current Asserts / Current Liability
Calculation:
Liquidity ratio 2017 ( £ ) 2018 ( £ )
Current Assets 24280 28545
Current Liability 23712 27098
Current Ratio 1.02 1.05
1