Financial Statement Analysiss
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I built the common-size and percentage-change financial statements (attached) but I am not certain if I am drawing the correct conclusions. Would like some help with summarizing the results of the financial statement analysis by evaluating the following questions:
-How do ICN and Merck compare in their profitability and risk?
-On what factors are they similar or significantly different?
-Of the different forecasted scenarios, which do you believe is most likely for ICN and Merck?
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Solution Summary
I built the common-size and percentage-change financial statements (attached) but I am not certain if I am drawing the correct conclusions. Would like some help with summarizing the results of the financial statement analysis by evaluating the following questions.
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built the common-size and percentage-change financial statements (attached) but I am not certain if I am drawing the correct conclusions. Would like some help with summarizing the results of the financial statement analysis by evaluating the following questions:
-How do ICN and Merck compare in their profitability and risk?
-On what factors are they similar or significantly different?
-Of the different forecasted scenarios, which do you believe is most likely for ICN and Merck?
My comments are as follows:
In financial analysis, we need qualitative information and try to read between the numbers. We have to ask all the right questions. Over the years, there are some ratios, which have become more popular and handy for rule of thumb analysis of financial statements. Our purpose in this note is not deride them but to advice the reader to use them properly to derive the correct results.
Ratio analysis can also help us to check whether a business is doing better this year than it was last year; and it can tell us if our business is doing better or worse than other businesses doing and selling the same things. In other words it helps in inter firm and intra ...
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