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Finance Assignment: Financial Analysis

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Added on  2020-05-28

Finance Assignment: Financial Analysis

   Added on 2020-05-28

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Running head: FINANCIAL ANALYSIS
Financial Analysis
Name of Student:
Name of University:
Author’s Note:
Finance Assignment: Financial Analysis_1
FINANCIAL ANALYSIS
1
Table of Contents
1. Ratio Analysis..........................................................................................................................2
Year-To-Year Comparison..........................................................................................................2
Formula Descriptions...................................................................................................................2
Explanations for changes.............................................................................................................2
2. Balance Sheet Analysis................................................................................................................3
Year to year comparison..............................................................................................................3
Fluctuations in terms of percentage.............................................................................................3
Rationale for the fluctuations.......................................................................................................3
3. Income statement analysis...........................................................................................................3
Year to year comparison..............................................................................................................3
Fluctuations in terms of percentage.............................................................................................4
Rationale for the fluctuations.......................................................................................................4
Reference List..................................................................................................................................5
Finance Assignment: Financial Analysis_2
FINANCIAL ANALYSIS
2
1. Ratio Analysis
Year-To-Year Comparison
Based on the depiction of 2016 to 2017 the ROA has decreased from 5.5% to 5.2%. The
ROC has reduced from 6.8% to 6.5%. The cash from operations has reduced from USD 1,269 in
2016 to $ 1,163.5 in 2017. In addition to this the cash from investing has also reduced. The
current ratio and quick ratio has increased from 1.7x in 2016 to 3.5x in 2017 and 1.5x in 2016 to
3.2x in 2017. The total debt to capital has further increased from 129.4% in 2016 to 154.2% in
2017. The total debt to capital has increased from 56.4% in 2016 to 60.7% in 2017.
Formula Descriptions
ROA is calculated by net income reported for a period and dividing the same with total
assets. ROC is EBIT divided by capital employed. Current ratio is current assets divided by
current liabilities and quick ratio is current receivables added to short term investment divided by
current liabilities. The total debt is to equity ratio is calculated by dividing total debt by total
equity (Uechi et al. 2015).
Explanations for changes
The reducing trend of the ROA is visible because of the reducing income and profits in
2016 to 2017. The increasing liabilities has led to decreasing tendency of ROC in 2017. The cash
from the investment activities has reduced due to Investment in Marketable & Equity Security
and high exposure to divestitures. The high amount of the current ratio clear shows that the
company has not efficiently utilised its assets to pay the liabilities. The same is applicable for
quick ratio as well (Hidayat and Meiranto 2014).
Finance Assignment: Financial Analysis_3

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