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Ratio analysis

Ratio analysis

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Published by Sidra Hye
financial ratio analysis
financial ratio analysis

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Categories:Types, Research
Published by: Sidra Hye on Feb 03, 2013
Copyright:Attribution Non-commercial

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01/02/2014

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Ratios Knorr(unilever)National Michelles
Rate of Return on Total Assets
Income before Interest Expense  Average Total Assets 
658308974836+10894732= 0.64 or 64%2585452674360+18353412= 0.11 or 11%106820289656386691+7279078652= 0.15 or 15%
Rate of Return on Common Stock
Holder’s Equity
 
Net Income- Preferred Dividends 
 Average Common Stock Holder’s Equity 
 
437463-061576= 7.10 or 710%86559-0414427+3315422= 0.23 or 23%46467874-0306229762+2698418882= 0.16 or 16%
Earnings Per Share
Net Income- Preferred Dividends  Average Number of Common Shares Outstanding 
71.04 2.09 9.22
Price Earnings Ratio
Market price per share of Common Stock Earnings per share of Common Stock 
1071.040.14:1102.094.78:1109.221.08:1
Analysis of Earnings Performance:
Stockholder’s and potential stockholder’s employ several ratios to help them evaluate
management performance in using the resources of the entity to earn profits. Through ouranalysis of Rate of Return on Total Assets and Rate of Return on Common Stock hol
der’sEquity of the three food companies, we realized that ROR of Knorr company’s
management earned an average of 64% on each dollar of assets invested in the company. While National food earned an average of 11% on each dollar invested and Michelles foodearned an average of 15% on their total assets.Since
the 710% return on common stockholder’s equity of knorr exceeds the 64% return
on total assets we analysed that management has made effective use of leverage or tradingon the equity. While we also analysed that knorr company is doing far better in theirearnings as compared to National Foods and Michelles, 23% and 16% respectively.

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