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Financial Ratios Essay Sample

Financial Ratios Pages
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MANAGERIAL FINANCE:

• Managerial finance is concerned with the duties of the financial manager in the business firm. • The financial manager actively manages the financial affairs of any type of business, whether private or public, large or small, profit-seeking or not-for-profit. • They are also more involved in developing corporate strategy and improving the firm’s competitive position.

FINANCIAL STATEMENTS ANALYSIS:

• Ratio analysis involves methods of calculating and interpreting financial ratios to assess a firm’s financial condition and performance. • It is of interest to shareholders, creditors, and the firm’s own management.

RATIO ANALYSIS:

In the following assignment two companies from the Cement Industries which are registered in the Lahore Stock Exchange (LSE) is being taken for the ratio analysis. At first the financial ratios of the each company is calculated and is compared with the previous year of the respected company financial ratios data (2008-2009) while in second step the ratios for the year 2009 of the both company is compared and is then analyzed that which company is in better position than the other.

Average Age of Inventory means for how many days inventory is unsold and is in possession of the company. The ratio clearly shows that the number of days for the year 2009 is decreasing which means inventory is sold quickly.

Average Age of Account Receivables means how quick company’s receivables are collected. The days are increased from 2008 to 2009 that means company is getting its debts bit late. So there is a decline in Average Age of Account Receivables.

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