MANAGERIAL FINANCE

About company3

What are financial statements?4

Users of Financial Statements & four groups4

Purpose for which they would use them4

Accounting ratios5

Analysis of ratio5

Liquidity ratios5

Current ratio5

Profitability ratios9

Operating profit Margin9

Net profit Margin10

Solvency ratio11

Working capital ratio12

Conclusion13

Introduction

The company I have selected a company from service industry for the financial statement analysis over the period of three years; that is Access Intelligence LLC. The assignment clearly illustrates the purpose of these financial statements, along with its different set of users. The four key ratios are used in this assignment, and the results are analyzed in detail mentioning charts, and calculations.

About company

Access Intelligence LLC is widely known leading company in providing the service related to business information. This information is mostly included in its portfolio of the products they offer. The known business products are e-letters, e-media solutions, e-learning, magazine, and various other digital products.

If we will look at the table, it shows the revenues for the current year i.e. 2012 are around $50m. In 2004, Philips Business Information (PBI) was renamed as Access Intelligence; currently it has the workforce of around 349 employees.

50m

349

Revenue in $

Employees

Source: (Accessintel.com, 2013)

What are financial statements?

Financial statements include set of statements such as income statement, balance sheet, cash flow statement and the stockholders equity along with supplementary notes. An income statement tells the financial performance of the company by mentioning all revenue and expense accounts (white, 2006; Penamn, 2007). On the other hand, balance sheet speaks about the financial position of the company at the particular point of time. These collectively represent the information regarding the company financial pin points.

Users of Financial Statements & four groups

There are several users of the financial statement ranging from, management, employees, investors, government agencies, creditors etc (Garriosn et al., 2003). For, our purpose the key four users of the company's financial statement will be investors, creditors, management, and the government agencies.

Purpose for which they would use them

Every group of users will use the financial statement according to their own purpose. Investors will use the financial statements to look at the key figures so as decide whether to invest in the company or not. Whereas, the government agencies will make use of these statements to identify the relevant income on which they could impose the tax on the company (Chatfield & Dalbor, 2005). Similarly, creditors will use in order to find the credibility position of the company and to decide whether to lend the money or not. Management simultaneously makes all the information useful for its own self assessment of the company (Gitman, and zutter, 2000).

Accounting ratios

For, the purpose of the assignment accounting ratios which I will be using include liquidly ratio, profitability ratio, solvency ratio, and the working capital ratio. Since, the accounting ratios are important to calculate the performance and position of the company in a quick way as these ratios are easy to calculate and interpret (Brealy et al., 2006).

Analysis of ratio

The four key ratios, profitability, liquidity, solvency and net working capital for the company are calculated and interpreted below with ...