Financial Analysis of Taylor Wimpey PLC and Barratt Development PLC

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These are a mathematical assessment of the company’s financial statement categories. The assessment helps creditors, investors, and management team of the enterprise to understand better the overall performance of the business and identifies areas, which require improvement, (Thorp, Edward, 2010). For better understanding, financial ratios are categorized into the following groups: profitability ratios, efficiency ratios, solvency ratios, liquidity ratios, and market ratios

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1Financial Analysis of Taylor Wimpey PLC and Barratt Development PLCName:Course:Instruction:Institution:Date:2Question 3: Financial Ratios AnalysisThese are a mathematical assessment of the companys financial statementcategories. The assessment helps creditors, investors, and management team of theenterprise to understand better the overall performance of the business and identifiesareas, which require improvement, (Thorp, Edward, 2010). For better understanding,financial ratios are categorized into the following groups: profitability ratios, efficiencyratios, solvency ratios, liquidity ratios, and market ratios.Profitability ratioThese ratios are used to assess the income statement accounts to show anenterprises ability to generate profits from its business operations. The primary focus ofprofitability ratios is on the companys return on investment in assets and inventory. Theimportant ratios that creditors and investors consider when assessing the profitability ofthe company under profitability ratios are as follows:Gross margin ratioThe gross margin ratio is a profitability ratio used in measuring the profit of theenterprise by assessing how the corporation sells its inventory. Investors and creditorsof the company favor higher ratio since when the ratio is high, the company is sellinginventory at a higher percentage of profit, (Farris, Paul W.; Neil T. Bendle; Phillip E.Pfeifer; David J. Reibstein, 2010).From the analysis of the t
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