Question

If you were the appropriate financial manager of any firm what would be your observations and recommendations be? use any example for any firm

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Answer 1

The role of a Financial Manager is to monitor and control financial performance through analysis of financial statements and financial ratios.

Microsoft	Profit margin	Asset turnover	Equity multiplier
30/6/2017	Net income/Total sales	Total sales/Total assets	Total assets/Total equity
	21204000/89950000	89950000/241086000	241086000/72394000
	0.2357	0.3731	3.3302
	ROE = 0.29
Apple	Profit margin	Asset turnover	Equity multiplier
30/9/2017	Net income/Total sales	Total sales/Total assets	Total assets/Total equity
	48351000/229234000	229234000/375319000	375319000/134047000
	0.2109	0.6108	2.7999
	ROE = 0.36

Taking example of the above data

1.It can be observed that Microsoft profit margin is higher than Apple’s i.e. Microsoft is able earn more profit for every dollar in sales when compared to Apple Inc.

2.The asset turnover of apple is almost double that of Microsoft. i.e. Apple is able to earn more revenue from every 1$ in assets when compared to Microsoft.

3.The debt component is more in Microsoft when compared to Apple i.e. Microsoft is high levered.

4.The overall ROE is higher for Apple, which means it is generating better wealth for equity share holders.

Similarly various observations can be drawn based on the available information of an organization.