Question

I have to do a presentation where I explain and compare the ratio analysis of the IBERDROLA company of years 2015 and 2016, and say at the end if I would like to invest in such a company/business. And comment alittle bit on accounting policies cash flow statement BS IS and notes. The link of this is bellow: https://www.iberdrola.com/wcorp/gc/prod/en_US/corporativos/docs/FinancialStatements_AuditorsReport_Consolidated16.pdf

at this link you find everything, also the financial statements, or you can google it

Answer 1

We will start with income statement

1. Sales growth

2. EBITDA (operating margins- rise or fallen). IF so, why? Look at the detailed notes of income statement and find out yourself

3. Interest cost ( this is linked to debt). A high interest cost and debt is not good for the business

4. PAT margins- Combination of operating margins, depreciation, Interest cost

Now we will move to balance sheet,

Most important thing here is working capital.

Debtor days, creditor days, inventory days (how stable are they)

Exposure to group companies, loans and advances, these can be crucial. For eg, if the other entity is making losses, then it will impact company's financials

Cash and bank balances available

Total debt in the company, ability of the company to pay its debt obligations. Cash flows vs debt repayments and interest obligations

Try to compare everything with industry since every industry characteristics are different

You can refer to ratios in following link and prepare your report

http://www.netmba.com/finance/financial/ratios/