Profitability Characteristics: The Financial Analysis Of A Company

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FINANCIAL ANALYSIS The financial analysis of any company involves the calculation and comparison of ratios which came from the information given in the company’s financial statements. Under this ratio there are four kinds of ratios which we calculate generally: i. LIQUIDITY RATIOS: The term liquidity means cash in hand which a firm required to meet its short term obligations. The ratios which come under this category are Current ratio, Quick/ Acid-Test ratio, and Cash ratio. ii. PROFITABILITY RATIOS: Profitability ratios are used to measure the company’s performance in terms of profit earned by the company after deducted all costs & expenses. Common profitability ratios which are used to measure the company’s profitability are- Return on assets (ROA), Return on equity (ROE), Return on investment (ROI), Return on sales (ROS), Operating margin (OM) and Gross profit margin (GPM). iii. …show more content…

ACTIVITY/TURNOVER RATIOS: Activity or turnover ratios are used to determine the operational efficiency of any industry, these ratios used to know that how quickly certain current assets can be converted into cash. The generally used activity/turnover ratios are- Debtors turnover ratio, Inventory turnover ratio, Average collection period, Fixed assets turnover ratio and Total asset turnover ratio. iv. LEVERAGE RATIOS: Leverage ratios tell us about the financing method of any company. Basically leverage ratios used to measure the long-term solvency of a firm. The commonly used leverage ratios are- Debt-equity ratio, Debt-asset ratio and Debt to total capital ratio. RATIO ANALYSIS OF AXIS BANK VS HDFC BANK: In this report we are comparing Axis bank with HDFC bank by calculating the ratios of them. AXIS BANK HDFC BANK RATIOS FY2013 FY2014 FY2013 FY2014 LIQUIDITY RATIO: (I)Current ratio (II)quick ratio PROFITABILITY RATIO: (I)Return on assets (II) return on

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