The trading world uses hazard analysis to aid in determining the health and viability of a given social club. While insecurity ratio analysis alone does not provide stretch forth answers about the health and viability of a company, it provoke raise life-threatening questions that will help determine where the company stands in its industry. in that location be four types of fiscal ratios used in financial ratio analysis. ?Leverage ratios show how heavily the company is in debt; liquidity ratios measure how easily the firm can put its hands on cash; efficiency or derangement ratios measure how productively the firm is using its assets; and lettuceability ratios ar used to measure the firm?s give up on its investment? (Brealey, Myers, Marcus, 2004). The two companies reviewed by this learning team are Google and yokel. Thesecompanies are found in the technology sphere of the business world under the industry category of profit nurture Providers. Comparing the two most recent fiscal eld 2004 and 2005, both companies had a high unsay on its investment. In the years 2004/2005, Yahoo?s operating profit edge was 33% and 48% respectively, while Google?s was 20% and 35% respectively. The return on equity for Yahoo was 12% and 22% respectively, and Google was 14% and 16% percent respectively.
It is not all told pull what these numbers tell us but companies parcel out ?information,? moment their product does not require a expectant breed of capital for product inventory in commit to repay revenue. Although both companies realized profit margin gains in 2004 and 2005, Yahoo?s pro fit margin was larger and their return on eq! uity was higher than that of Google. The total asset overthrow shows that for all dollar of asset produced in 2004 and 2005, only .39 and .49 of gross revenue were generated for Yahoo, and .96 and .60 for Google. This could... If you inadequacy to get a full essay, order it on our website:
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