Research Paper on "Financial Statement Analysis"
Research Paper 3 pages (1008 words) Sources: 0
[EXCERPT] . . . .
Financial Statement AnalysisIn order to determine which companies excel at overall performance, some value must be assigned to the different ratios and performance measures. For example, Inergy has exceptional liquidity but offers a terrible return on equity. One way to settle the issue is to rank the firms in a few key categories and see which firm has the best overall ranking. This method will emphasize stability and consistency over excellent performance in any one single measure. For this exercise, current ratio, ROE, gross margin and receivables turnover will be used. These measures cover the key categories -- liquidity, investment returns, profitability and management efficiency. The debt/equity ratio has been excluded specifically because a firm's choice of capital structure is dependent on the industry; and these firms all have low levels of total debt/shareholder's equity.
The firms score as follows: Ferrellgas scores a 12, Amerigas scores an 11, Suburban a 7 and Inergy a 10. Before a final determination is made about which company is the healthiest, the results should be examined for red flags. For instance, there is no difference in rankings between operating margin and gross margin, proving the usefulness of the latter measure. There is a red flag, however, with respect to liquidity. The current ratio at Inergy is very high, but its interest coverage is the lowest of the four firms. This points to the company having a balance sheet loaded with cash but lacking in operating liquidity. Indeed, Inergy had a much lower current ratio in the previous fiscal year, indicating that the company has received an influx of cash that is unduly inflating the current ratio for t
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2. Perhaps the most controversial part of the analysis is the claim that Inergy has the weakest financial position of the four companies. Inergy has a strong cash position, but this is derived from operating activities. Prior to the debt and stock issues that have contributed substantial cash to Inergy, the company had the weakest balance sheet of the four firms. While it is encouraging that the company was able to raise capital, the effects of this capital raising should be taken into consideration when analyzing the overall financial health of the company. The debt issue also saw Inergy's debt increase by 55%, a much larger increase than any other company experienced.
Suburban has the best debt-equity ratio of any of these firms. Ferrellgas, for example, has a balance sheet that is 93.9% debt.… READ MORE
Quoted Instructions for "Financial Statement Analysis" Assignment:
Basically this a research paper that I am working in and I have already get all information and financial statements for the firms I am comparing.
I have already calculated all the needed ratios in analyzing and comparing the companies. Here is what I will need exactly to do:
Compare an overall summary of how your target company (FGP) compares to each comparable company.
a. List companies in order of top performance overall and explain why?
b. Support your conclusion with facts from your overall analysis.
c. Is this a good industry to invest in and how attractive is your target company?
I will upload my Excel file I have and you can find all ratios there starting from the cell # 106 on the All financial Tab. I added another tab *****"Ratios,*****" I just tried to put the ratios on their different criteria as you will be able to see.
I will need this paper on Saturday, but could you please let me know by tomorrow if you will be able to do it so I can have a backup plan.
Thanks
*****
How to Reference "Financial Statement Analysis" Research Paper in a Bibliography
“Financial Statement Analysis.” A1-TermPaper.com, 2011, https://www.a1-termpaper.com/topics/essay/financial-statement-analysis-order/3177930. Accessed 5 Oct 2024.
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