Description
I will provide the following weeks paper as a guide as they will be needed to complete this assignment. my mother has passed away a week ago and if you opt to do this ill need no plagiarism as I do not have the energy to re write the paper thanks.
Financial Ratio Analysis
Purpose of Assignment
The purpose of this assignment is for students to analyze statements of a publicly traded company to provide an opinion of the company's financial condition using selected cash flow
Assignment Steps
Search the internet for financial statements of publicly traded companies. Students are required to utilize different financial statements from the Week 2 Individual Assignment.
Analyze the cash flow of the identified publicly traded company in a minimum 1,400 words including the following:
·Explain the uses for each of the three classifications of ratios: liquidity, solvency, and profitability.
·Calculate the current ratio, profit margin, and after tax ROE, and then compare these with the ratios provided (access the financial statements along with the ratio analysis from the company selected in the Week 1 "Overview of Financial Statement" assignment and Week 2 "Revenue Forecast" assignment).
·Display your calculations.
Cite a minimum of one peer reviewed reference from the University Library.
Explanation & Answer
Attached.
Running Head: Financial Ratio Analysis
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Financial Ratio Analysis
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Financial Ratio Analysis
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Introduction
This assignment will analyze financial statements of McDonald and Coca Cola
companies to provide an opinion of the two company’s financial condition using cash flow for
the financial year 2015/2016; and then comparing their cash flows. Cash flow statement or
analysis gives the information about a company’s cash inflows and outflows over a specified
time period, computed weekly, quarterly or annually. Generally, it reveals how an organization
spends its money and where its money comes from. In a wide scope, cash flow statement
consists of the money used in operating, investing and financing activities as well as decreases or
increases in other accounts on the organization’s balance sheet (Nurnberg, 2006).
The best way through which a business can keep track of its cash flow is by executing a
cash flow report (Nurnberg, 2006). Operating cash flows refers to the money used to run the dayto-day business activities of the company while investing cash flows relate to organization’s
investments such as acquisition of long term assets such as purchase of property, plant and
equipment; and securities. Additionally, operating cash flows reflects the amount of money
generated from the company’s core products and services. Therefore, a strong, positive cash flow
from operations indicates a healthy company. On the contrary, financing cash flows relate to the
business’ creditors and investors, and dividends paid to stockholders (Friedlob & Schleifer,
2003).
Cash flow analysis serves as the best tool for testing or determining an organization’s
liquidity since it shows changes over time and can be used in gauging and assessment of the
short term feasibility of the company (Nurnberg, 2006). The cash flow statement reflects the
company’s liquidity and not its profitability which is determined by the income statement.
Financial Ratio Analysis
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Therefore, the cash flow analysis applies ratios which focus on the cash flow and how solvent,
liquid, and viable the organization is (Barnes, 1987). To further understand the financial position
of a company, we need to review the following ratios: liquidity, solvency and profitability.
Liquidity Ratio
A company’s liquidity is defines as its capability of transforming assets into...
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