Financial Ratio Analysis And Industry Averages Finance Essay

monetary balance Analysis And patience add ups finance EssayThe legal injury earning P/E dimension bespeaks how attractive a unfalterings stock is for investment. The P/E of Etisalat has change magnitude from antecedent year 2009 which line of battles that in 2010 Etisalat has become more attractive for investments.Profit great power dimensionsReturn on general blondness (ROCE or hard roe) roe = Earnings after Tax Equity Sh atomic number 18holders fund x 100This symmetry shows the rate of return of the insecurity takers in addition referred to as the stockholders (Sinha, 2009). The ratio shows the stockholders or investors the rate of return of their investments in stocks of Etisalat. The fol brokening instrument panel shows the hard roe ratio for Etisalat pecuniary Ratios20102009ProfitabilityROE20.4122.17The above circuit board clear shows that the rate of return for the shareholders of Etisalat has decrease from 22.17% in 2009 to 20.41% in 2010. Therefore the risk of investment in stocks of Etisalat has increase in 2010 study with the ratio of 2009.ROA (Return on bring assets)Return on centre Assets (ROA) = (Net Income meat Assets) x 100Higher ROA indicates the higher return on Assets, this ratio must be above the industry average to show greater returns on Assets (Brigham Houston, 2009). Note another reason for a low ROA could also indicate the intentional use of debt for financing activities of a firm. The undermentioned plank shows the ROA mensural for Etisalat. financial Ratios20102009ProfitabilityROA9.7412.40The ROA for Etisalat has reduced in 2010 to 9.74% from 12.40% in 2009, which shows the reduced rate of return on assets, indicating the poor performance of Etisalat also showing the use of debt by the firm.Liquidity Ratios flow ratio current Ratio = present-day(prenominal) Assets sure LiabilitiesThe ratio shows the weak or stronger liquid position of a firm, higher the current liabilities lower the current ratio and vice versa. The calculated ratios of Etisalat are shown in the pursuit duck pecuniary Ratios20102009LiquidityCurrent Ratio0.790.83The runniness position of Etisalat has reduce negatively when comparing current ratio of 0.79x in 2010 with 0.83x in 2009, consequently the ability of Etisalat to convert its assets into cash has reduced.Quick RatioQuick, or acid test, ratio = (Current assets Inventories) Current LiabilitiesQuick Ratio also depicts the liquidity position of the firm to pay off short-term liabilities without relying on sales (inventories). The following table shows the calculated Quick Ratio for Etisalat.Financial Ratios20102009LiquidityQuick Ratio0.780.82Acid test of Etisalat revealed that the liquidity of the firm to pay shot-term liabilities has reduced from 0.82x in 2009 to 0.78x in 2010.Asset wariness Ratios size up overturn Ratio entry Turnover Ratio = Sales InventoriesThis ratio shows the number of times inventories are turned over into sales, and higher value shows that the inventories are being held for lengthy times. The Inventory perturbation ratio of Etisalat is shown by the following table.Financial Ratios20102009Asset ManagementInventory Turnover Ratio100.96115.03The ratios in the table clearly show the ability of Etisalat to convert inventories into sales has change magnitude shown by declining Inventory Turnover Ratio of 100.96x in 2010 from 115.03x in 2009.Debt Management Ratios extreme Debt to Total AssetsDebt ratio = Total Debt Total AssetsThis ratio shows in percentage the risk level faced by the firm, the debt ratio of Etisalat is shown with the admirer of following tableFinancial Ratios20102009Debt ManagementTotal Debt to Total Assets Ratio6.344.52The values in the table above show that the risk of investing in Etisalat has increased from 4.52% in 2009 to 6.34% in 2010.Financial Profile Emirates Integrated telecommunications Company PJSC and its footsloggerThe financial profile of Emirates telecom is presente d by the data retrieved from financial statements of the firm.Financial Ratio Analysis Emirates Integrated telecoms Company PJSC and its Subsidiary 2010 and 2009Data retrieved from the Financial Statements20102009AED000AED000Current Assets4,671,7792,224,887Total Assets12,519,6789,531,905Current Liabilities6,441,4623,676,842Total Liabilities7,423,9116,740,365Inventories47,30038,931Sales Revenue7,074,0975,338,699 touch on102,19912,998EPSAED 0.31AED 0.06N.I.1,310,431264,124 commercialise think of Per ShareAED 2.72AED 2.79Total Shareholder Equity5,095,7672,791,540Total Debt904,7353,000,000The ratio analysis is conducted on the basis of data retrieved in the table bove.Ratio Analysis of Emirates Integrated Telecommunications Company PJSC and its SubsidiaryMarket Value RatiosP/E Ratio(P/E) Price/Earnings Ratio = Market Price Per Common Share Earnings Per ShareThe share price of Emirates Integrated Telecommunications for the year ended 31 December, 2009 was AED 2.786 and 31 December, 2 010 AED 2.72 (Bloomberg, 2013). The following table shows the calculated P/E for Etisalat.Financial Ratios20102009Market ValueP/E8.7746.43The price earning P/E ratio shows how attractive a firms stock is for investment. The P/E of Emirates Telecommunication has reduced drastically from previous year 46.43x in 2009 to 8.77x in 2010 which shows that in 2010 Emirates Telecommunication has become little attractive for investments.Profitability RatiosReturn on Common Equity (ROCE or ROE)ROE = Earnings after Tax Equity Shareholders fund x 100This ratio shows the stockholders or investors the rate of return of their investments in stocks of Emirates Telecommunication. The following table shows the ROE ratio for Emirates TelecommunicationFinancial Ratios20102009ProfitabilityROE25.729.46The above table clearly shows that the rate of return for the shareholders of Emirates Telecommunication has increased from 9.46% in 2009 to 25.72% in 2010. Therefore the risk of investment in stocks of Emi rates has reduced in 2010 comparing with the ratio of 2009.ROA (Return on Total Assets)Return on Total Assets (ROA) = (Net Income Total Assets) x 100The following table shows the ROA calculated for Emirates Telecommunication.Financial Ratios20102009ProfitabilityROA10.472.77The ROA for Emirates Telecommunication has increased in 2010 to 10.47% from 2.77% in 2009, which shows the increased rate of return on assets.Liquidity RatiosCurrent ratioCurrent Ratio = Current Assets Current LiabilitiesThe calculated current ratio for Emirates Telecommunication are shown in the following tableFinancial Ratios20102009LiquidityCurrent Ratio0.730.61The liquidity position of Emirates Telecommunication has reduce negatively when comparing current ratio of 0.73x in 2010 with 0.61x in 2009, consequently the ability of Emirates Telecommunication to convert its assets into cash has reduced.Quick RatioQuick, or acid test, ratio = (Current assets Inventories) Current LiabilitiesThe following table show s the calculated Quick Ratio for Emirates Telecommunication.Financial Ratios20102009LiquidityQuick Ratio0.720.59Acid test of Emirates Telecommunication revealed that the liquidity position of the firm to pay shot-term liabilities has increased from 0.59x in 2009 to 0.72x in 2010, which shows that Emirates Telecommunication is more liquid in 2010.Asset Management RatiosInventory Turnover RatioInventory Turnover Ratio = Sales InventoriesThe Inventory turnover ratio of Emirates Telecommunication is shown by the following table.Financial Ratios20102009Asset ManagementInventory Turnover Ratio149.56137.13The ratios in the table clearly show the ability of Emirates Telecommunication to convert inventories into sales has decreased shown by change magnitude Inventory Turnover Ratio of 149.56x in 2010 from 137.13x in 2009.Debt Management RatiosTotal Debt to Total AssetsDebt ratio = Total Debt Total AssetsThe debt ratio of Emirates Telecommunication is shown with the help of following table Financial Ratios20102009Debt ManagementTotal Debt to Total Assets Ratio0.070.31The values in the table above show that the risk of investing in Emirates Telecommunication has reduced from 0.31% in 2009 to 0.07% in 2010. patience Averages in Telecommunication Industry UAEThe industry averages of the telecommunication for P/E, ROE, ROA, Debt Ratio and Current Ratio areP/EP/E Industry Average Telecommunication Industry UAE20092010P/E Etisalat9.6910.31P/E Emirates46.438.7720092010P/E Industry Average28.069.54ROEROE20092010Etisalat22.1720.41Emirates9.4625.7220092010ROE Industry Average15.81523.065ROAROA20092010Etisalat12.49.74Emirates2.7710.4720092010ROA Industry Average7.58510.105Debt RatioDebt Ratio20092010Etisalat4.526.34Emirates0.310.0720092010Industry Average2.4153.205Current RatioCurrent Ratio20092010Etisalat0.830.79Emirates0.610.7320092010Industry Average0.720.76