Question

Choose one of analysis methods that explained in Chapter 13.

You have to do the following:

- Explain the analysis method.

(what the method means? and what is used for?)

- Apply the analysis method to one of a real company's numbers.

(you can take the number from the internet)

- Explain the results.

(what the results means)

Note, you will not use any method that used by other student before you.

This assignment will be available from Saturday 11 to Wednesday 15 of April.

Answer 1

Explain the analysis method.

(what the method means? and what is used for?)

Under financial terminology – Analysis method represents teh process of analysing company’s financial statement for decision making purpose This analysis helps external stakeholders , shareholders to understand the companies position which help Investor to taje decision for further investment in same company . Financial Statement analysis definitely provides the overall health of an organization as well as to evaluate financial performance and valuation of Business .

There are three main way to analyse financial statements – Horizontal analysis- this analysis represents a Year on year comparison of company performance . Other one is vertical analysis provides a way to compare different companies and finally ratio analysis which provide information about company performance

Select company – Coco Cola

On financial analysis of Coca Cola , noticed following points :

1) Company established revenue growth for the quarter ending 31st Dec 2019 $ 9.7 Billion represents 14.91% growth YOY basis

2) Company established yearly revenue growth 8.65%

On further analysis of Key Financial Ratio , as per above table , we noticed that comoany at present doing excellent in terms of :

a) Gross margin , EBITDA Marging as well as Net Margin . Company established almost 23% net profit Margin in 2019 which is quite good as compared with other years

b) Comoany also established ( rather ) generate good return on Investment in 2019 Company established 18% rerun on overall Investment .

On the basis of above key ratio analysis along with strong revenue growth , it is quite clear that Investor must deposit money further in this company and it will help other externak stakeholders, creditors etc to acquire gain / confidence on the company