Winter 2017 Page 1: Acct 611 Financial Report Project, ACCT 611
Analytical techniques like ratio analysis are important when trying to assess the relative financial health and performance of organizations. You can look at their ratios to see their liquidity level. Or their return on assets, which shows how efficiently management uses available resources. Also, the ratio of debt to revenue can be used as a way to evaluate whether companies are taking on too much risk. Profitability indicators also help determine if profits are being made.
The ratios indicate that one organisation has higher current or debt ratios than the other. It could be because they are more liquid or have fewer liabilities. The returns of the second company are slightly lower than that of its counterpart, but this could be simply due to differences in their total assets.
Analyzing both companies based upon these financial metrics can give a better picture of their performance and help investors decide which company is more attractive.