Ratio Analysis and Statement of Cash Flows Paper

The trading world uses hazard analysis to aid in determining the health and viability of a given friendship. While danger ratio analysis alone does not provide preserve answers about the health and viability of a company, it thunder mug raise obese questions that will help determine where the company stands in its industry. in that location be four types of financial ratios used in financial ratio analysis. ?Leverage ratios show how heavily the company is in debt; liquidity ratios measure how easily the firm can put its hands on cash; efficiency or derangement ratios measure how productively the firm is using its assets; and advantageousness ratios ar used to measure the firm?s make on its investment? (Brealey, Myers, Marcus, 2004). The two companies reviewed by this learning squad are Google and yokel. Thesecompanies are found in the technology orbit of the business world under the industry category of earnings nurture Providers. Comparing the two most rece nt fiscal eld 2004 and 2005, both companies had a high diminish on its investment. In the years 2004/2005, Yahoo?s operating amplification edge was 33% and 48% respectively, while Google?s was 20% and 35% respectively. The return on equity for Yahoo was 12% and 22% respectively, and Google was 14% and 16% percent respectively.

It is not exclusively pull what these numbers tell us but companies dish out ?information,? moment their product does not require a majuscule breed of capital for product inventory in methodicalness to repay revenue. Although both companies realized profit margin gains in 2004 an d 2005, Yahoo?s profit margin was larger and! their return on equity was higher than that of Google. The total asset turnover rate shows that for all dollar of asset produced in 2004 and 2005, only .39 and .49 of gross revenue were generated for Yahoo, and .96 and .60 for Google. This could... If you inadequacy to get a full essay, order it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay