Financial Management

LA Suite East plc

Ratio Analysis for LA Suite East plc

Profitability Ratios

The profitability of LA Suite East plc is satisfactory as the trends of the company from 2010 to 2013 shows that the company has been decreasing its profits. This statement can be endorsed by the evaluation of the profitability ratios. The return on assets of LA Suite East plc from 2010 to 2013 is reflecting that profitability structure of the company decreased from 0.1 to 0.05. In addition to this, return on equity also shows decrease over the years, as the return on equity was 0.27 in 2010 and is 0.19 in 2013.

In addition to this, return on investment is showing the increase in the profitability structure of LA Suite East plc. However, the operating profit margin shows decrease over the year that is from 2010 to 2013. Besides it, the tax rate remained stable that is 0.21 over the period under consideration which seems to be a positive sign for the LA Suite East plc. Keeping this in view, it can be said that the overall performance of the LA Suite East plc is not encouraging for the investors.

Liquidity Ratios

The liquidity ratios that include quick ratio, net current assets as a percentage of total assets and current ratio are decreased from 2010 to 2013. This reflects that the liquidity position of the LA Suite East plc is not satisfactory. The current ratio decreased from 0.86 to 0.72 from 2010 to 2013 respectively; this ratio indicates the extent to which current assets cover current liabilities. In addition to this, the net current assets as a percentage of total assets also decreased from 2010 to 2013. Besides it, the quick ratio of the company has been relatively stable that is 0.51 over the period under consideration that is from 2010 to 2013.

The liquidity ratio of the LA Suite East plc analyzes the dynamic selected in fleeting balance in connection to current liabilities. Liquidity is the simplicity of usage, bargains, transformation of material or different assets into money to meet current budgetary commitments.

Liquidity is the capability to have an element to reach its obligations in the short term, acknowledging the level of liquidity of assets. A few records could be acquired relying upon the level of the things taken for its development. Liquidity demonstrates the investment term for the capability of assets to be sold rapidly at a value near business sector. For great liquidity will match the velocity of its execution at an ostensible cost. Monetary markers figured on the foundation of reporting endeavor to determine the LA Suite East plc's capacity to reimburse the ostensible current obligation from existing current (working capital) assets. In practice, the estimation of liquidity ratios consolidated with an adjustment of the balance sheet of the LA Suite East plc, whose reason, sufficient appraisal of the liquidity of specific assets. For instance, a piece of money balances can have zero liquidity; some piece of receivables may have a development surpassing one year; credits ...