A financial performance analysis of bundura nickel ltd by mr lenon watambwa (2019) abstract
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- Efficiency Ratios
- Coverage ratios T
- Market Prospect Ratios
| Profitability Ratios: According to Hossain and Habib (financial statements are generally insufficient to provide information to investors on their own the numbers contained in those documents need to be put into context so that investors can better understand different aspects of the company’s operations. Ratio analysis is one of three methods an investor can use to gain that understanding. Performance ratio A ratio is one number expressed in terms of another, Garbutt (1972). According to EA. Adedeji (2014) went onto say ratio analysis has served as areal means of monitoring, measuring and improving performance in an organization hence a significant relationship between ratio analysis and organizational performances has been established to be true. Lucey (1988) added that ratio analysis is used to summarize key relationships and results in order to appraise financial performance. Financial ratios are employed to denote past trends, compare present performances and may give an indication to future trends, performances or operations of a company and thus acts as signposts for plans and policies. Efficiency Ratios: According to investopedia efficiency ratio is typically used to analyse how well a company uses its assets and liabilities internally. An efficiency ratio can calculate the turnover of receivables, the repayment of liabilities, the quantity and usage of equity, and the general use of inventory and machinery. Coverage ratios The ability to separate companies with a healthy amount of debt from those that are overextended is one of the most important skills an investor can develop. Most businesses use debt to help finance operations, whether it’s buying new equipment or hiring additional workers. Interest Coverage Ratio: The basic concept behind the interest coverage ratio is pretty straightforward. The more profit a company generates, the greater its ability to pay down interest. Debt-Service Coverage Ratio: While the interest coverage ratio is widely used, it has an important shortcoming. In addition to covering interest expenses, Electronic copy available at https://ssrn.com/abstract=3521211 7 businesses usually have to pay down part of the principal amount each quarter, too. Asset Coverage Ratio: This ratios compare a business’s debt in relation to its earnings. Therefore, it’s a good way to look at an organization’s ability to cover liabilities today. Market Prospect Ratios: includes dividend yield, PE ratio, earnings per share, and dividend payout ratio. Bragg (2018), said these are the most commonly used ratios in fundamental analysis. Braga (2014), says investors use these ratios to determine what they may receive in earnings from their investments and to predict what the trend of a stock will be in the future .they are used to compare publicly traded companies stock prices with other financial measures like earnings and dividend rates. Investors use market prospect ratios to analyse stock price trends and help figure out a stock’s current and future market value. Download 1.23 Mb. Share with your friends:
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