Assignment

Importance of Developing Financial Plans

Financial plans are one of the most important and commonly used tools for the financial management of a company. It helps analyst to study the performance of the company. Relate primarily to cash flow, assets and profits. The Financial Plan is the quantized version of your project and its credibility with investors depend heavily on their preparation, not to be confused with the Business Plan

Using Ratios-Manager's Perspective

Sometimes it is difficult to conclude results from just financial statements (Income Statement, Balance Sheet and Cash flow), hence, financial ratios help analyst determine the strength of the company. In attempting to analyze financial statements through the use of financial ratios organizations and investors should have the expertise to interpret them in order to bring about positive changes in the organizational performances. Financial ratio analysis covers the profitability, efficiency, liquidity and the leverage situation of the company. The financial performance that follows is evaluated and analyzed from the perspective of investor or shareholder. However, financial ratios offer assistance to many stakeholders including Banks, Creditors, Government and Investors

Ratio Assessment

Liquidity Ratio

Liquidity ratios enable the organizational management to analyze their position to meet the day-to-day requirements and the ability to pay off its short-term debts. These include net working capital, current ratio and quick ratio. It is important for company to maintain good liquidity position in order to present a strong picture to creditors and shareholders.

Leverage Ratios

Leverage ratios are used to calculate the financial leverage of a company, to identify the risk measures associated with the company`s financial structure. It provides an idea of the company's methods of financing its activities and also measures its' ability to meet financial obligations when it comes due.

Debt Ratio

The debt ratio indicates the extent to which total assets is financed with debt. The Debt Ratio measures the intensity of the entire debt of the company in relation to its funds, measures the percentage of total funds provided by creditors.

Debt to Net worth Ratio

Your debt ratio is a measurement unit that compares the total income you have (disposable income 1) and the total amount of your debts. This data is used by credit institutions to assess your repayment ability. Different credit rating, which is the portrait of your credit history, debt ratio takes into account your current income.

Earn Ratio

Earnings Ratio is the ratio of the Course of this action on the Earnings per Share. ...