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Financial Ratio Analysis.
Non-financial company is a company that does not provide financial services e.g., banks. These are companies that provide goods and services like health and sports.
In this analysis, I am analyzing the Motor vehicle manufacturing industry as an example. The table below is a summary of the information from various car manufacturers;
KEY RATIOS OF FIVE NON-FINANCIAL COMPANIES
For the financial year 2018/2019
| Company name | Firm 1 Toyota | Firm 2 Ford | Firm 3 Honda | Firm 4 Audi | Firm 5 BMW | Firm 6 Nissan |
| Current Ratio | 1.06 | 1.16 | 1.3 | 1.58 | 1.15 | 1.45 |
| Debt/Equity Ratio | 0.52 | 4.68 | 0.52 | 0.28 | 1.25 | 0.74 |
| Asset Turnover | 0.58 | 0.62 | 0.77 | 0.85 | 0.47 | 0.57 |
| Profit Margin | 6.59% | 0.11% | 3.39% | 5.41% | 5.05% | 0.57% |
| Price to Earning | 8.15 | 221 | 10.32 | 11.68 | 9.89 | 44.43 |
| Market to Book | 0.97 | 0.86 | 0.57 | 1.23 | 0.85 | 0.36 |
| Closing Stock price (Feb 1st) | 131 | 6.97 | 24.61 | 868 | 63.96 | 734 |
- Liquidity Ratio,
Audi motor company has the highest current ratio of 1.58; therefore, it implies that it has its ability to pay short term debts is very high.
- Financial leverage ratios,
Ford motors have a leverage ratio of 4.68%, which puts the company at a very high risk in case it is made to pay up its debt; it would collapse.
- The asset management or turnover ratios,
Audi motor company has the highest Asset turnover in this group of five firms; thus, it can fully utilize its assets in order to generate lots of revenue for the company.
- Market value ratios,
Audi motor company is doing quite well in the price-earnings ratio as it is close to the industrial average, and thus if one invests in Audi company, they would have a high return.
References
(BMWG), Bayerische. “BMW ST (BMWG) Financial Ratios.” Investing.Com, 2019, https://www.investing.com/equities/bay-mot-werke-ratios.
(F), Ford. “Ford Motor (F) Financial Ratios.” Investing.Com, 2019, https://www.investing.com/equities/ford-motor-co-ratios.
(HMC), Honda. “Honda (HMC) Financial Ratios.” Investing.Com, 2019, https://www.investing.com/equities/honda-ratios.
(NSANY), Nissan. “Nissan Motor Co Ltd ADR (NSANY) Financial Ratios.” Investing.Com, 2020, https://www.investing.com/equities/nissan-motor-co-ltd-ratios.
(NSUG), Audi. “Audi AG (NSUG) Financial Ratios.” Investing.Com, 2019, https://www.investing.com/equities/audi-ag-ratios.
(TM), Toyota. “Toyota (TM) Financial Ratios.” Investing.Com, 2019, https://www.investing.com/equities/toyota-ratios.