Purchase Solution

Applying Financial Analysis Tools

Not what you're looking for?

Ask Custom Question

How to analyze a company financial performance, using the following tools:

Profitability Analysis
Profit Margin Analysis
Asset Turnover
Fixed Asset Turnover
Rate of Return on Common Shareholders' Equity
Earning Per Common Share

Purchase this Solution
Solution Summary

This answer summarizes how to apply profitability ratios the data in a company's financial statements and the business news to calculate a company's profitability, and thereby analyze the firm's performance.

Solution Preview

The kind of company that would have its financial statements available on the Internet would be a publicly traded company, so your first step would be to shortlist such a company, and find the latest financial statements (which would most likely be posted on its website). These annual reports would have the financial data for the company for the last concluded financial year, plus one year prior (or two years, depending on the company). So if the last concluded financial year was 2018, the reports would have data for 2018 and 2017, while some may have data for 2016.

Since you also need EPS, which requires price per share, you will also need the price of the stock, which can be obtained from the business papers.

The second step would be to calculate each of the ratios listed in the question. First, apply the formula for each to calculate the figure.

For example, let's take a look ...

Purchase this Solution
Free BrainMass Quizzes
Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

View More Free Quizzes
Related BrainMass Solutions

  • Learning about applications of PEST, Porter’s 5 , SWOT

    There is no optimal size for applying these tools to all the organizations in this sector can use these tools for the betterment of their organization (Sadler, 2003).

  • What tools are used for financial statement analysis?

    294043 What tools are used for financial statement analysis? What tools can be used for financial statement analysis? What do these tools tell you about financial performance? What kinds of business decisions can be made using these tools?

  • Qualitative and Quantitative Analyses

    Quantitative Analysis can assist by applying advanced statistical analysis techniques to help you get more from your data, as well as external data sources.

  • Purpose of a financial statement analysis

    290896 Purpose of financial statement analysis; tools to use; benchmark performance What is the purpose of financial statement analysis? What are some of the tools that we can use to analyze financial performance?

  • capital budgeting tools

    Some in-depth definitions of capital budgeting tools are provided, and guidance is provided to the student on applying the related financial principles to the evaluation of the manager.

  • Tools for analyzing financial statements

    There are various tools to analyze financial statements such as Ratio analysis, vertical analysis, Z score etc. These tools can be used by management to evaluate the performance of the company.

  • SWOT analysis on both Smith & White and Makatume

    By applying a proper organization structure, the problems related to the complexity of its size can be reduced. By applying various sales promotional tools, the company can persuade its customers in an effective way.

  • Decision Making Tools: Using the right analysis tool will compensate for inexperienced managers.

    Importance of Analysis Tool to the Finance or Accounting Arms of a Company These tools also help a company's financial and accounting arms in the form of different types of analysis tools more so than operations manager.

  • Tools can be used for financial statement analysis

    294456 Financial Statement analysis - What tools can be used for financial statement analysis? What tools can be used for financial statement analysis? What do these tools tell you about financial performance?

View More Related Solutions