The life and success of any company or corporation depends on the quality of decisions made by its managers and staff. According to the economic dictionaries a financial statement is a formal record of the financial activities of a business, person or other entity. For a business enterprise, all the relevant financial information is presented in a structured manner in a form easy to understand. The financial statements may be formed both for the internal and the external users. The banks, financial institutions and prospective investors can be referred to external users that form their relations with the company according to its market and financial position.
Two given questions are answered below to accomplish the purpose of this paper. The company exhibited almost uniform profitable results as indicated by the net profit margins of 6. This would still mean that the increase in revenues in absolute figures almost did caused the company to become less efficient for the year under review.
Before beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This document will use a variety of these ratios to analyze the firm.