Financial ratio analysis.
Financial ratio analysis is an important topic in finance textbooks. It is widely used to summarize the information in a company’s financial statements in assessing its financial health.Students will download the relevant financial data from the Internet and perform ratio analysis for two companies work in the same industry.
To evaluate how the selected company is performing over time, students are instructed to follow the path shown below to retrieve the financial profile for the selected company via Doha Stock Market.
• Go to Qatar stock exchange website: www.qe.com.qa
• From the menu, click on listed securities then Financial Statements
• Choose the year 2013 and hit submit, and then download the annual financial report for the firms that you select. The 2013 report contains the balance sheet for 2013 and 2012, the income statement for 2013 and 2012.
• Each student will perform the ratio analysis for the two companies in 2013 based upon the following financial ratios:
• Leverage Ratios: to measure the extent to which the company’s assets are financed with debt;
• Liquidity Ratios: to measure the company’s ability to pay its bills;
• Profitability Ratios: to measure the company’s ability to generate earnings;
• Efficiency Ratios: to measure the company’s ability to utilize its assets;
• Market Value Ratios: to measure the market perception about the company’s future prospects.
• After calculating the financial ratios, you have to compare the ratios in the two companies and determine which company is better.