Common Size Statement, Comparative Satement and Trend Analysis

In order to ascertain how well a company is performing, analyses must be done in regard to the business being stable, including its’ ability to pay debts, how much cash or other liquid assets are available, and whether the organization is viable enough to continue operations. These analyses typically look at income statements, balance sheets, and statements of cash flow, where current and past performance will be studied with the goal of predicting how the company will perform in the future.

Creditors normally focus on the liquidity or solvency of the borrower in terms of current ratio and quick ratio, which indicate whether the company has enough working capital to cover the short-term debts. Myer will enter into a syndicated facility agreement to refinance the existing borrowings of the Myer Group. Besides, creditors are interested in the business risks the company might undertake, which indicate the possibility that the company might be unable to pay back the long-term liability in the future. From this point, the expectation on high return on investment and high profitability in the long run make the creditor’s interest aligned with shareholders’ value.

Prospective investors need information to predict a company's potential for success, profitability and dividends based on the profits estimated in statement of financial position in order for decision-making. Current investors are also interested on the estimated profits for the future in order to determine whether or not they should continue to invest in an organisation.

Assessing the long-term financial health of a company is an important task for management in its formulation of goals and strategies and for outsiders as they consider the extension of credit, long-

In accounting there is much to be learned, about the financial aspects of a business. In the past five weeks I have learned the importance of financial reports and how they relate to the success of an establishment. These reports may include balance sheets and income statements, which help accountants and the public grasp the overall financial condition of a company. The information in these reports is really significant to, managers, owners, employees, and investors. Managers of a business can take and deduce financial

Users are likely interested in information that will assess the company's liquidity, solvency, risk and return, etc. Therefore, they can know more about how is the company financed and the availability of cash to pay debt from the balance sheet. They can know exactly about allocation of the use of cash for different activities from the statement of cash flows. Income statement will provide the information about the revenues and expenses of the company. They can also access information associated with dividend paid and retained earnings.

The following financial data illustrates the firm’s short-term ability to pay maturing obligations and to meet unexpected needs for cash:

In Part A, I will examine liquidity and coverage ratios, assessing each company’s ability to meet its debt obligations in both the short and long term, to pay dividends, and to cover its expected operating expenses. Next, in Part B, I will inspect profitability ratios, assessing the ability of each enterprise to provide its investors with a return on their

The management and the understanding of the key processes is one of the instrumental things in the management of the business. It is important for the firm to understand that the goals of the enterprise is to ensure expansion of each and every aspect so that the same can improve the overall process of management of the business. The firm valuation and the details relating to the same is also important considering the overall use and the discussion for the enterprise. For the firm it is important to consider the overall needs and requirements so that the decision making and the processing of the enterprise decisions can be implemented properly and the same can lead to effective management of the business of the enterprise.

Of the three businesses in the case study only Yum Brands, Inc. is noted to have long-term debt and current notes payable. Panera Bread and Starbucks are noted as having no long-term debt or current notes payable. In 2009 Yum Brands, Inc.’s ratio was 23.8 but in 2010 it dropped to 2.92 indicating something happened financially which now makes the company less liquid and less wiggle room on paying current liabilities. As for Panera Bread and Starbucks, neither has long-term debt indicating that if they are financing projects the financing is for a short duration and using current income to expand and finance any new ventures which could be a good indicator of future

Overall the long term solvency position of the company satisfactory and less risky, because managerial policies kept the repercussion of recession ( increase in interest rate) in mind and hence reduced its reliance on debt financing This gives it a secure position from the point of view of long term creditors.

Evaluate the stability of the business. Look at the debts and creditors, the sales numbers, and if prior bankruptcy has been filed.

• Profitability: Does the company make a profit and has it made profits over a period of three or more years? What do its debt levels look like?

Finding out the current financial status of the company in order to able to process further of a chosen segments which chosen resources Selecting the appropriate segment for the firm

have explained that the Financial statements provide asummarized view of the financial position and operations of a firm. Therefore, much can belearnt about a firm from a careful examination of its financial statements as invaluabledocuments / performance reports. The analysis of financial statements is, thus, an important aidto financial analysis.