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Financial Analysis assignment
Contents
Introduction .................................................................................................................................................. 2
Analysis & Discussion .................................................................................................................................... 2
Financial Ratio Analysis ................................................................................................................................. 2
Profitability Ratios..................................................................................................................................... 3
B. Cross Sectional Analysis ........................................................................................................................ 6
C. Causes of Decreasing Profitability ........................................................................................................ 9
E. Efficiency Analysis ............................................................................................................................... 12
G. Conclusion & Recommendations ........................................................................................................... 15
References .................................................................................................................................................. 16
Introduction
The main perspective of every organisation is to attain economic significance in the long
run, because it is the only thing that enforces them to retain their position for a long span of time.
It is more than essential for an organisation to execute something extra for the betterment of their
organisation to maximise the utility of their shareholders (Brigham and Houston, 2004).
One of the major lines of actions that associated with the organisations is to increase the
wealth of their shareholders in a productive and effective manner. It is extremely important for
the organisations to analyse their financial structure in a timely manner, because without this
particular analysis, it will become very difficult for the companies to sustain positively and
effectively. One of the major financial methods that used apprise the management and the
analysts about the financial performance of the company, which known as Financial Ratio
Analysis.
The main perspective of this assignment is to examine the financial health of Al-Saad for
five years. Different lines of ratios will be taken into consideration for this particular analysis.
The next section of this report will examine the description related to the company, followed by
the trend analysis and financial ratio analysis.
Analysis & Discussion
Financial Ratio Analysis
Financial Ratio Analysis is one of the most effective and powerful tools that used by
the companies for their betterment in particular. This particular tool has the accolade to analyse
the insight of an organisation (Johnson, 1971). There are certain line of ratios that can be used by
the companies and analysts to assess the financial position of a company, and the lines of ratios
that will be taken into account for the same analysis are as follows
•
Profitability Ratios
•
Efficiency Ratios
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Liquidity Ratios
•
Solvency Ratios
Profitability Ratios
Profitability Ratios are the line of ratios that used to assess the values of a company in
terms of generating profitability. It is a powerful line of ratios that gives insight information of a
company in terms of generating profit. The major lines of ratios that can be used in this particular
aspect are Net Profit Margin (NPM) and Gross Profit Margin.
Net Profit Margin (NPM)
...