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Financial Analysis Management & Enterprise - Doc

   

Added on  2020-10-22

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Financial Analysis Management& Enterprise

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................11. Contrast and comparison of financial position and performance of listed company...............1Ratio Analysis..............................................................................................................................1Summary of year 2017...............................................................................................................12Horizontal statement of profit and loss (Daimler).....................................................................13Horizontal statement of financial analysis (Daimler)................................................................16Vertical statement of profit and loss (Daimler).........................................................................18Vertical statement of financial analysis (Daimler)....................................................................19Horizontal statement of profit and loss (Tesla)..........................................................................19Horizontal statement of financial analysis (Tesla).....................................................................19Vertical statement of profit and loss (Tesla)..............................................................................19Vertical statement of financial analysis (Tesla).........................................................................192. Presenting critical analysis of cash position of both organisation.........................................20CONCLUSION..............................................................................................................................20REFERENCES..............................................................................................................................21APPENDIX....................................................................................................................................22Daimler's Vertical analysis of statement of profit and loss.......................................................22Daimler's Vertical analysis of statement of financial position..................................................23Tesla's horizontal analysis of statement of profit and loss.........................................................25Tesla's horizontal analysis of statement of financial position....................................................26Tesla's vertical analysis of statement of profit and loss.............................................................28Tesla's vertical analysis of statement of financial position........................................................29

INTRODUCTIONFinancial analysis is known as process for evaluation of budgets, businesses, financerelated entities and projects to determine its performance along with suitability. In the presentscenario, financial analysis has numerous variety of techniques which might be directly utilisedfor assessing financial viability of business which comprises various common methodologiessuch as ratio analysis, horizontal and vertical analysis. These analytical methods consist ofinternal and external audit, financial statements and investigations. The present report willprovide financial analysis of Tesla and Daimler and comparison among their financialperformance over year 2014 to 2016. Tesla is American energy and automotive organization as ithas expertise in manufacturing electric car and Daimler is also in same industry as Germanmultinational corporation. This report will help in determining both financial strength andweaknesses and on this aspect it would be highlighting the strongest organization on basis offinancial backgrounds. In the same series, it will critically analyse the position of cash of thesespecified organization of similar duration with its findings.1. Contrast and comparison of financial position and performance of listed companyRatio AnalysisLiquidity RatioDaimlerTeslaDaimlerTeslaDaimlerTeslaDaimlerTeslaParticulars20142014201520152016201620172017Current Ratio1.151.521.190.991.211.070.861.23Quick ratio0.841.020.880.490.90.690.530.921

Interpretation: The above graph is depicting current ratio of year 2014 to 2016 as itshows liquidity of both organization. The ideal ratio is of 2:1 as both organization are notcapable for meeting its obligation. However, Tesla was leading in year 2014 but in 2015, itscurrent asset decreased along with increment in current liability which leads to fall in comingyear and this trend is continued till year 2017. In the similar aspect, Daimler was havingapproximate stable ratio from year 2014 to 2017 but it was not up to the mark.2

Interpretation: The above graph is showing quick ratio of Daimler and Tesla, as idealratio is 1:1 over year 2014 to 2016. The quick ratio of Daimler is increasing from year to year asit signifies capability for meeting short term obligations with quick assets in short term duration.On the contrary, Tesla was having sufficient quick assets for writing off its current liabilities butin year 2015, there was sudden decrement because of increment in inventory and reduction incurrent asset. It had been clearly viewed about fluctuation in Tesla's ratio which shows risk onbasis of liquidity.Profitability RatioDaimlerTeslaDaimlerTeslaDaimlerTeslaDaimlerTeslaParticulars 20142014201520152016201620172017Gross profit ratio (GPR)0.2170.27580.21270.22840.20850.22840.1890.2089Return onAsset (ROA)0.037-0.050.039-0.110.035-0.03-0.0680.041Return oncapital employed(ROCE)0.077-0.050.09-0.1360.076-0.04-0.0780.077Return onEquity (ROE)0.159-0.3220.157-0.8160.147-0.142-0.4630.164Gross profit ratio3

Interpretation: The graph is reflecting gross profit ratio of year 2014 to 2017 of Daimlerand Tesla. It is reflecting relationship among total sales revenue and gross profit for evaluatingbusiness's operational performance. The gross profit of Tesla was higher than compared toDaimler in year 2014 but in 2015 and 2016 it decreased and remained constant. However, thistrend of decrement continued in 2017 and Daimler had given huge margin. Over year 2014 to2017, gross profit ratio of Daimler was stable as it was maintained in this duration.Return on asset4

Interpretation: The above graph is representing indicator about profitability of bothorganization on basis of total assets. It helps in measuring efficiency of business entity forproducing earnings through assets and economic resources of their balance sheets. It could beclearly viewed that, Tesla is getting negative returns from year 2014 to 2017 and on the contrary,Daimler is raising its returns on asset from year to year.Return on capital employed5

Interpretation: The above graph is showing financial ratio which helps in measuringefficiency of both entities for producing margin through employed capital. There is presence offluctuations in ratio of Daimler in this duration but in year 2014 and 2017 it was 7% or 0.77.However, Tesla is not capable for generating returns as in 2014 it was -0.05, -0.136 in 2015, -0.040 in 2016 and -0.073 in 2017 which is articulated as in efficient by comparing from Daimler.Return on EquityInterpretation: The above graph is reflecting return on equity of both organization ofyear 2014 to 2017 of Daimler and Tesla. It could easily view that Daimler is giving good returnsas compared to Tesla with reference to equity. The return of equity of Daimler is 0.159, 0.157,0.147, 0.104 in year 2014, 2015, 2016 and 2017 respectively.Efficiency ratioDaimlerTeslaDaimlerTeslaDaimlerTeslaDaimlerTeslaParticulars 20142014201520152016201620172017Asset Turnover Ratio (in times)0.730.770.740.580.670.460.460.66Inventory 5.323.585.272.84.943.234.45.096

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