Managerial Finance: Ratio Analysis, Performance Assessment, and Recommendations

Managerial Finance

Table of Contents
Portfolio 1........................................................................................................................................3
a. computation of ratios ...............................................................................................................3
b. Assessing performance of both the companies .......................................................................5
c. Recommendations for improving the ratio of the company ....................................................7
d. Limitations of financial ratios..................................................................................................8
Portfolio 2........................................................................................................................................9
a. Advising the most suitable project that needs to be selected by top management................12
b. Limitations of using capital budgeting techniques in the longer period for the purpose of
decision making ........................................................................................................................12
REFERENCES................................................................................................................................1

Portfolio 1
a. computation of ratios
Ratio analysis Glaxo smith Reckitt Benckiser Group Plc
Particulars Formula 2017 2018 2017 2018
Current assets 15907 16927 5406 4942
Current
liabilities 26569 22491 6576 7614
Current ratio
Current
assets/Current
liabilities 0.60 0.75 0.82 0.65
Current assets 15907 16927 5406 4942
Inventory 5557 5476 1201 1276
Quick assets 10350 11451 4205 3666
Current
liabilities 26569 22491 6576 7614
Quick ratio
Quick
assets/Current
liabilities 0.39 0.51 0.64 0.48
Net profit 2169 4046 6189 2181
Net sales 30186 30821 11449 12597
Net profit
margin
Net profit/Net
sales*100 7.19% 13.13% 54.06% 17.31%
Gross Profit 19844 20580 6823 7635
Net sales 30186 30821 11449 12597
Gross profit
ratio
Gross
profit/Net
65.74% 66.77% 59.59% 60.61%

sales*100
Long term
debts 14264 20271 11515 9670
Total assets 56381 58066 37013 37650
Current
liabilities 26569 22491 6576 7614
Capital
employed
Total assets-
Current
liabilities 29812 35575 30437 30036
Gearing ratio
Long term
debts/Capital
Employed 47.85% 56.98% 37.83% 32.19%
Share price 15.62 13.23 55.91 56.59
Earnings Per
share 31 72.9 324.6 339.9
Price Earning
ratio
Share
price/Earning
s per share 0.50 0.18 0.17 0.17
Net income 2169 4046 6189 2181
Average
number of
shares
outstanding 4886 4914 69200 52760
Earning per
share
Net
income/Avera
ge shares
outstanding 0.44 0.82 0.089 0.041