Description
1.Your contribution to the discussion requires 2-3 paragraphs, use of proper grammar, and citing of sources. Participation in the weekly discussion provides the opportunity to learn and apply new information in manageable amounts of timely contributions, and to receive useful feedback.
Financial ratio analysis is conducted by three main groups of analysts: credit analysts, stock analysts, and managers. Please explain the primary emphasis of each group and how that would impact the ratios on which they focus. Name some specific financial ratios that each group should focus on (explain).
Also, explain why the inventory turnover ratio would be more important for someone analyzing a grocery store chain than an insurance company.
2.Your contribution to the discussion requires 2-3 paragraphs, use of proper grammar, and citing of sources. Participation in the weekly discussion provides the opportunity to learn and apply new information in manageable amounts of timely contributions, and to receive useful feedback.
Referencing textbook readings, lecture material, and current business resources define an opportunity cost. Explain how this concept is used in a time value of money analysis.
Also, discuss how an annuity compares to an uneven cash flow stream. Provide an example of an annuity and an example of an uneven cash flow stream. Discuss how it’s possible to have an annuity inside of an uneven cash flow stream.
Explanation & Answer
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Running Head: FINANCIAL RATIOS ANALYSIS
Finance Ratio Analysis
Student’s name
University Affiliate
FINANCE RATIOS
2
Ratios
There are three main groups of analysts containing different objectives of the firms
concerned. The credit analysis focuses on the company’s ability to pay off their debts and checks
if the firm is worthy of lending money. Thus credit analysts will focus on ratios that concern
financial leverage. The rates may include the current ratio and the quick ratio which determines
assets, liabilities and the debt ratio (Rist et al. 2014). The significant concerns of stock analysts
are the stock price of the firm, capacity to keep it over time, and returns incurred on investments.
In focus of the organizations’ equity, ratios applied are Return on Common Equity, Price/
Earnings Ratio, Earning per share amongst others. The manager’s objective is to keep the
company working efficiently for profits to rise. Therefore, they emphasize on asset management
ratios like the Inventory Turnover and Day Sales Outstanding to assert the company is efficiently
running. Another concern would be the Profitability ratios that would allow them to assess the
profit the company makes comparatively.
Turnover Ration Importance
In a grocery store, perishable products exist in their stores. Such a business needs to keep a high
turnover so that they do not have to create waste by failing to sell their stock. Low turnover
indicates they might be producing excess, less popular items or too much old list stored. It is
critical to know the sale product of the company. Insurance com...