Ratio Analysis

The following report is a brief comparative analysis of two of Australia’s largest deposit-taking financial institutions (FI), Australia and New Zealand Banking Group Ltd. (ANZ) and Westpac Banking Corporation (Westpac). This report seeks to identify which of the FIs has a greater aggregate return per dollar of equity and thus establish the highest performer, or most profitable, of the two. The Return on Equity Model (ROE) (Koch & MacDonald,

This paper examines financial ratio analysis by defining, the three groups of stakeholders that use financial ratios, the five different kinds of ratios used and their applications, the analytical tools used in analysis, and finally financial ratio analysis limitations and benefits.

This report provides a financial quarterly trend analysis for Costco Wholesale Corporation, Inc. founded in 1983. Costco Wholesale Corporation is the seventh largest retailer company in the world. As of July 2012, it was the fifth largest retailer, and the largest membership warehouse club chain in the United States ("Wikipedia, the free," 2011). Costco Wholesale Corporation’s stock is publicly traded on the National Association of Securities Dealers Automated Quotation (NASDAQ) under the symbol “COST”, which I will use as reference throughout this report.

Importance: This shows company’s ability that how perfectly they can pay off its current liabilities with only cash and cash equivalents

1.Suggest the financial ratio that most financial analysts would use to evaluate the financial condition of the company. Provide support for your rationale.

received a dividend of $2.25 during the year. What is your total rate of return?

Ideally it should be between 1 and 2. A figure less than 1 indicates that the company did not have enough cash, for example in 2009 with a ratio of 0.82. according to Ted Baker’s web site (http://www.tedbakerplc.com) They had a major business expansion, they spent £11.8 million in 2009 to open up thirty two (32) new stores compared to£1.5 million in 2008 when they opened twenty three (23) , such expansion does not come cheap. There was unpaid royalty income by Hartmax Corporation which was one of the licensed outlets in America which filled for bankruptcy on 23rd January 2009 before the group income statement came out at the end of January. (Ted Baker Report 2009-2010 page 8). On the whole the ratios have been consistent in the last five years. After the 2009 down turn in the figures, management took action by controlling costs and commitments.

Each of these financial ratios serve an analytical purpose to the financials of a company. The current ratio measures a company’s ability to pay off their obligations. This includes long term and short term. The acid test ratio is an indicator of whether a company has enough short term assets to cover its immediate liabilities. Times interest earned is a ratio that measures a company’s ability to meet all of its debt obligations. Profit margin is expressed as a percentage and measures how much of each dollar of a sales a company will keep in their earnings. Total asset turnover is a ratio that measures the efficiency of the use of resources within a company. It measures the ability to generate sales through the use of the company’s assets. Inventory turnover is a ratio to measure how quickly a company’s inventory is sold. It also measures how effectively investing into inventory is used within the company. Inventory turnover helps figure out if obsolete inventory is present or if pricing problems exist.

3. What do you expect the financial position of the business to be in 2006?

Financial ratios are "just a convenient way to summarize large quantities of financial data and to compare firms' performance" (Brealey & Myer & Marcus, 2003, p. 450). Financial ratios are very useful tools in order to determine the health of a company, help managers to make decision, and help to compare companies that belong to the same industry in order to know about their performance.

Financial ratios have proven to be a useful tool for effective financial management and planning. Primarily known for improving the understanding of financial results and trends over time, financial ratios are a unique way to provide a quantitative analysis to communicate overall organizational performance. This tool is useful for managers to focus in on the company’s strengths and weaknesses from which strategies and operations can be formed. Investors are also commonly known to use ratios to measure results against other companies to make appropriate judgments regarding management effectiveness and mission impact. For ratios to be deemed meaningful and useful, they require reliable and accurate calculated information. This is simple

And to achieve these results, the sales, operating income and average total assets had to all increase proportionately. In the short term, this would be a good trend, but if it continues, it could be a sign that Sample Company is not keeping a big investment in assets, because not that as the denominator in this ROI calculation, a low asset figure can be used to help drive up the overall result. Meaning that if this trend continues, it may be an indication of increased operations rather than improvement in asset efficiency.

This is a positive sign for investors and could help in part to account for the overall increase in stock price.

Financial ratios 1. Current ratio Current ratio= Current Assets/Current Liabilities 18,720 / 17,089=1.0954 2. Quick ratio Quick ratio= (Current Assets – Inventories) / Current Liabilities (18,720 – 3,581)/17,089=0.8859 3. Return on Assets ratio

1899 marks the 50th anniversary of Pfizer Inc producing high-quality products in an efficient manner while consistently striving to produce greater products. A leader in the chemical business, Pfizer is anchored by the industrial and pharmacological industries. In 1919, research in citric acid allows Pfizer to develop it without having to depend on European citrus growers; this invention spurs chemist Jasper Kane to begin the process for unlocking the key for large-scale production of penicillin. 1939 marks the year that Pfizer is recognized for being the leading company in fermentation technology. 1941 to 1944 are pivotal years for Pfizer as they invest millions of dollars to produce over five times more penicillin than originally anticipated- a feat that earns Pfizer the Army-Navy “E” Award for being the world’s largest producer of the “miracle drug”.