MSc Managerial Finance RESIT ASSIGNMENT JUNE 2013

MSc Managerial Finance RESIT JUNE 2013 - Assignment workoutRatio analysis is considered to be a very accurate and reliable tool when it comes to analyzing and interpret the fiscal observation tower and performance of an entity. The main(prenominal) reason for performing a ratio analysis is to quantify the results of the financial operations of an entity and go them in the light of financial performance of the prior year(s) in arrangement to quantify different aspects of the financial feasibility. Peavler, R. (2001) The financial ratios are unremarkably divided into various sub categories such as profitability, gearing and liquidity, each put emphasis on a different area of the financial outlook of the organization. These analyses form an integral part of the financial statement analysis, especially from the investors point of view, which are continuously looking for avenues to invest in countries having strengthened and stabilized financial ratios and representing an upward trend. It is of great significance that the ratios mustiness be benchmarked against a standard in order for them to possess a meaning. Keeping that into account, the comparison is usually conducted between companies portraying homogeneous business and financial risks, between industries and between different time periods of the same guild. Investopedia.com (2012 The financial ratio performance of The GAME multitude Plc has been evaluated for the last three years in order to draw attention to various financial trends and significant changes over the period. The analysis is divided into three main categorize namely Profitability, Liquidity and Gearing. Profitability ratios identify how efficiently and effectively a company is utilizing its resources and how lucky it has been in generating a desired rate of return for its shareholders and investors. Liquidity ratios measure the ability of the company to cursorily convert its asset into liquid cash to settle its short term liabilit ies. Whereas, the Gearing ratios identifies the extent to which the company is financed through debt and to what degree the operations are being conducted from the finance raised through raising blondness capital or otherwise. For the purpose of financial ratio analysis, the financial year from 2011-2009 has been evaluated in order to analyze the financial outlook of The GAME Group Plc. The information has been extracted from the annual report of the company. Profitability Ratios 2011 2010 2009 Profitability Ratios perfect(a) profit rim 26.30% 27.80% 26.14% Net profit margin 1.75% 5.00% 6.31% ROI 2.33% 9.23% 11.48% ROCE 4.79% 18.24% 29.22% Gross profit margin is an analyzing tool which assists in identifying how effectively and efficiently the company is utilizing its raw materials 1, variable cost related to labor and fixed be such as rent and depreciation of property plant and equipment. The ratio is calculated by dividing the gross revenue revenue by the gross profit. If we analyze the gross profit margin trend of The GAME Group Plc it appears that there is decline in the percentage over the last financial year. The gross profit margin was the lowest in the financial year 2009 when the gross profit