Financial Statement Analysis of Square Pharmaceuticals Essay Example for Free

Financial Statement Analysis of Square Pharmaceuticals Essay I hope and elieve that you will be kind enough to consider any types of mistakes that occurred at the time of preparing this proposal. Thank you. Yours sincerely, Roll : 24040 Executive Summary A few comments on the organization and content of the report may be helpful to reader. In doing so, we realize that some topics may be more important to some reader then to other. For that reason we some advanced material (e. g. questionnaires) appears in appendices. Our goal is to help the reader who must compare financial position of these two companies. First we focused on the essential element of this report. We have included here the introduction of this report, objectives of the report, findings, methodology, so that the reader can get ideas easily. The second part is very important from the sense of this report. Here we have given our recommendation of the report. We have tried out level best to give the commendation neutrally. It also contains the conclusion of this report. Contents: Topic Page Introduction Objective of the Report Limitation of the Study Literature 2 Analysis 4 Summary and Conclusion 11 Introduction: Financial Statement includes the Balance Sheet, Income statement and other tatement which determine the companys performance. Financial ratio analysis is the calculation and comparison of ratios which are derived from information in companys financial statements. Financial ratios are the analysts microscope. It allowed them to get a better view of the firms financial health than Just looking at the raw financial statements. Objective of the Report This term paper is prepared under submitted as a major requirement of the Financial Accounting Course. Financial Accounting provides the facts needed to make informed economic as well as operational control. Limitation of the study is about: ) Based on only secondary source of data b) Time bound restrict me for further research on the topic c) possible to analyze every ratio of the financial statement There is not Literature: Financial Ratio: Financial ratios are useful indicators of a firms performance and financial situation. Financial ratios can be used to analyze trends and to compare the firms financials to those of other firms. Current Ratio Current ratio is the ratio of current assets of a business to its current liabilities. It is the most widely used test of liquidity of a business and measures the ability of a usiness to repay its debts over the period of next 12 months. Current ratio is calculated using the following formula: Current Ratio = Current Assets Current Liabilities Receivables Turnover Ratio An accounting measure used to quantify a firms effectiveness in extending credit as well as collecting debts. The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets. Receivables turnover ratio = Net receivable sales/ Average accounts receivables Inventory Turnover A ratio showing how many times a companys inventory is sold and replaced over a period. The days in the period can then be divided by the inventory turnover formula to calculate the days it takes to sell the inventory on hand or inventory turnover days. Inventory Turnover = Cost of Goods Sold Average Inventory Asset Turnover : The amount of sales generated for every dollars worth of assets. It is calculated by dividing sales in dollars by assets in dollars. Asset Turnover Ratio = Net Sales Average Total Assets Return On Asset: An indicator of how profitable a company is relative to its total assets.