Financial statement analysis Essay Example | Topics and Well Written Essays - 500 words

pecuniary statement analysis - Essay ExampleThe general rule is for a current ratio to be good it must be above 1.0. Both the current ratio and quick ratio of the ships association are excellent. The net margin of Happy hospital is 6.49%. A net margin measures the profitability of a company. In order to determine whether a net margin is good or not virtuoso must consider the industry in which the company participates. A good database to find the industry ratios for divers(prenominal) business industries is the Dun & Bradstreet database. If a company has a net margin that is higher than the industry measuring this company is performing above the industry norm. Another element to consider is whether a company is a non-profit organization or for-profit company. The net margin in a non-profit organization is irrelevant since the strategy of the company is to break even. On the other hand for-profit organizations seek to maximize its profitability. The asset utilization of Happy inf irmary was 63.56%. Firms seek to have high asset utilization because this metric illustrates how much revenues are being generated with the assets of a firm. The financial leverage of Happy Hospital is 10.22%, while the financial leverage of St. Agnes is 86.40%. The financial leverage ratios usher how much debt a company is using to finance its operation. The financial leverage position of Happy Hospital is much lower than St. Agnes Hospital.