investors and lenders. There are various financial terms which help in providing financial information of an organization. By looking at the raw data merely it is difficult to make any judgement from the income statement and balance sheet. “Ratio analysis is a form of financial statement analysis that is used to get a quick sign of a firm’s financial performance in several key areas. Ratio analysis is a cornerstone of fundamental analysis. Ratio analysis provides information about company’s financial information, whether it is in loss or profit.
“Shareholders’ equity is equal to a firm’s total assets minus its total liabilities”. (Investopedia)
Literature Summary and Review
When academicians were trying to prove that ratio analysis was no longer an effective tool for financial analysis, at that time the most appropriate studies available on this subject were given by Altman.E.I. a financial economist at New York University. The model was formulated which helped in determining the bankruptcy of companies. This model uses five financial ways to produce a single number, number is called Z=score is a general measure of corporate financial health. With its regulations and guidelines for ethical, transparent compliance, e.g., financial statements, the establishment of internal controls and for the ethical handling of actual or apparent conflicts of interest, full disclosure in the financial reports, and compliance with government rules and regulations, and the disclosure thereof, and as important as they are the health care industry.
Therefore, it is a healthcare organization liability to create transparent financial documents, that should...
... middle of paper ...
...enge that health care is facing is of revenue cycle management and increasing cost of the staff and supplies.
Nowadays there are constant changes of in regulatory and reimbursement, because which is a great concern among health care companies. Companies have strong understanding of their financial position they can easily manage to a changing market. Financial ratio has the ability to convert company’s financial information in a standardized format, which help the companies to compare themselves and identify their personal strength and weaknesses. A user can judge a company by just looking at few numbers instead of reading the whole financial statements.
Shareholders’ equity helps analysts to analyze the financial health of a company. It proves that firm is dividend paying firm if it has paid dividend for two years or more than two years
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- RATIO AND FINANCIAL STATEMENT ANAYLSIS Ratio and Financial Statement Analysis can be seen as a means to an end i.e. Ratio analysis is a financial tool to derive a Financial Statement. Financial Analysis are accounting reports in respect of economic activities prepared periodically to measure the performance of the business. It could also be said to be the analysis established for evaluating the performance of companies. Such criteria are used as parameters in deciding whether the organisation is performing satisfactorily or not.... [tags: Financial ratio, Financial ratios, Balance sheet]
1068 words (3.1 pages)
- Ratio Analysis Financial ratios analysis is conducted by managers, creditors, and investors alike. Ratio analysis uses line items of financial statements, either alone in or conjunction, to help users understand and quantify raw data. Attachment 22 (page XXX) shows the formulas for the financial statement ratios; Attachment 23 (page XXX) presents many the financial ratios for both Dollar Tree and Dollar General. Dollar Tree: Looking at Attachment 23, Dollar Tree’s times-interest-earned (TIE) ratio should be noted.... [tags: Financial ratio, Balance sheet]
1380 words (3.9 pages)
- Financial Ratio Analysis - Harry 's Hamster Limited Financial statements are useful as they can be used to predict future indicators for a firm using the financial ratio analysis. From an investor 's perspective financial statement analysis aims at predicting the future profitability and viability of a company, while from the management 's point of view the ratio analysis is important as it helps anticipate the future conditions in which the firm should expect to operate and facilitates strategic decision making (Brigham and Houston 2007, p.... [tags: Financial ratio, Financial ratios, Balance sheet]
1636 words (4.7 pages)
- This financial ratio analysis will help to identify Rolls-Royce’s strength and weaknesses during three years period from 2011 until the end of 2013. While it is a helpful tool for investors to make investment decisions base on profitability of the company, managers can make strategic decisions of the company. However, there are some limitations in using financial ratio analysis alone when make decisions. Comparing ratios with the industry norm and with the company’s rivals, the user of the financial ratio analysis will be able to anticipate future prospects.... [tags: Financial ratios, Financial ratio]
1377 words (3.9 pages)
- The Financial condition analysis is of vital concern to health managers, security analyst, investors and lenders. There are various financial terms which help in providing financial information of an organization. By looking at the raw data merely it is difficult to make any judgement from the income statement and balance sheet. “Ratio analysis is a form of financial statement analysis that is used to get a quick sign of a firm’s financial performance in several key areas. Ratio analysis is a cornerstone of fundamental analysis.... [tags: Balance sheet, Financial statements, Health care]
718 words (2.1 pages)
- What can you conclude about the company’s financial condition from its statement of cash flows. Comparing the company’s financial condition with the industry average you can tell that the company has increased its cash flow but there isn’t any increase in the finance, this could mean that the business has low sales, they may have more debt or more liabilities than assets. The inventory turnover is negative which means they are spending too much money for the products and not selling as much as they are spending.... [tags: Balance sheet, Asset, Financial ratios]
1071 words (3.1 pages)
- Ratio Analysis In order to make inferences about a company’s financial condition, its operations, and its attractiveness as an investment we have analyzed financial ratios and compare ratios derived from SVU’s financial statements (see chart 1). Gross Profit Margin The gross profit margin ratio is used to show how much of each sales dollar is left after certain costs are covered (footnote). Looking at the table, Supervalu has increased its gross profit margin from 14.4% in 2015 to 14.7% in 2016 (in millions of dollars).... [tags: Financial ratios]
1205 words (3.4 pages)
- General Motors - Financial Ratio Analysis I. General Motors History Highlights In its early years the automobile industry consisted of hundreds of firms, each producing a few models. William Durant, who bought and reorganized a failing Buick Motors in 1904, determined that if several automobile makers would unite, it would increase the protection for the group. He formed the General Motors Company in Flint, Michigan, in 1908. Durant had bought 17 companies (including Oldsmobile, Cadillac, and Pontiac) by 1910, the year a bankers' syndicate forced him to step down.... [tags: Business Finance Accounting GM]
1469 words (4.2 pages)
- ADC Tellecommunications Financial Ratio Analysis Corporate Background ADC Telecommunications (ADCT) is a communication equipment manufacturer located in Minneapolis, Minnesota, USA. Since 1952, the company has successfully weathered the tumultuous transformation process of technology. Today, ADC Telecommunications exclusively focuses on manufacturing computer-networking equipment. Increasing demand for fiber optic transmission systems like asynchronous transfer mode (ATM), synchronous optical networks (SONET) and most wireless communications systems, provide significant opportunities for ADCT.... [tags: Business Finance Management Essays]
1537 words (4.4 pages)
- Before beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This document will use a variety of these ratios to analyze the firm, Sample Company, as of December 31,2000.... [tags: Business Finance]
1415 words (4 pages)