FINANCIAL ANALYSIS

Financial Analysis

Financial Analysis

Introduction

Financial Statements and Ratio are considered to be the most reliable indicators for a company's financial performance. However, they can also be used to judge the company according to its industry. It can be seen that every company which is operating in a different industry, has different financial outlay. Two companies, who belong to different industries, will have different financial outlook, which would be relating to their respective industries. The financial statements we will be using are income statement and balance sheet. Apart from this, we will also be using financial ratios to analyze the company's performance and match it to the industry.

Discussion

In this paper, we will be analyzing the financial statements and ratios of ten unnamed organization and match them to ten different industries, in regards with their financial structure and performances. The industries we will be matching are Commercial airlines, Commercial banking (items fitted into the same categories as the non-financial firms), Computer software, integrated oil and gas, IT service provider, Liquor producer and distributor, Mobile phone service provider, Pharmaceutical preparations, Retail grocery stores and Semiconductor manufacturer.

Company 1

f we look at the financial statements of company 1, we will come to know that this organization belongs to the industry of retail grocery stores. The reason for matching it to this industry is the overall financial outlook and its ratios. The finished goods section of the income statement, among all the ten companies, was the highest for company 1, which itself showed that the company is involved in retail business. Apart from this, this company also had substantial creditors and debtors, which allowed us to conclude that it is involved in retail business.

Company 2

If we look at the financial statements of company 2, we will come to know that this organization belongs to the industry of IT service providers. The reason for matching it to this industry is the overall financial outlook and its ratios. The statements for company 2 show no raw material, work in progress or finished good. This concludes that it is a servicing business. If we look at its receivables and payables for short term, they also indicate that they are involved in high public dealing and offer a service. The other thing which, made its case for IT service provider more convincing, was the fact that it has very low fixed assets, which also did not have any depreciation. All these factors conclude that company 2 is an IT service provider.

Company 3

If we look at the financial statements of company 3, we will come to know that this organization belongs to the industry of Liquor producer and distributor. The reason for matching it to this industry is the overall financial outlook and its ratios. If we look at the work in progress section of company 3, it clearly shows that it is a manufacturing business, because the common sized sum for work in progress is comparatively higher than other companies. The other reason which concluded, that it is a Liquor ...