Public Companies Considered for Examination
For analysis, one service company named Wal-Mart Stores while two manufacturing concerns named General Electric Company (GE) and Abercrombie & Fitch Company are chosen for examination. All these three companies belong to the United States and are publicly traded on The New York Stock Exchange (NYSE).
Liquidity Analysis - Cash Available To Pay Current Debts
For analysis in this section, quick ratio is examined to see how much cash is available to public companies under review to cover each $1 of current debt/liability. In this ratio, quick assets are considered as they are easily and quickly convertible to cash without diminution in their value and exclude inventories as well as prepayments .
Investment in Operations and Non-Current Assets
Operational Efficiency for Three Years
Comparatively, the net income for Abercrombie & Fitch has improved from 2012 to 2013 because much of the positivity was witnessed in case of more revenue generation to cover costs and payment of operating expenses. However, the net income of Wal-Mart Stores Inc. has shown a shaky trend over the course of a three-year period despite the fact of having large trading volume by figures.
Grading as A, B or C
On the basis of the financial performance analysis presented in this paper, one may conclude to grade the President of General Electric Company as “A” because of highest liquidity strength and more ability to cover costs and pay expenses. Then, grade “B” should be given to Abercrombie & Fitch’s President because of his ability to improve net profit generation capacity dramatically from 2012 to 2013 as well as ability to slightly improve liquidity strength. Grade “C” is given to the President of Wal-Mart Stores Inc. because he is not able to generate more profitability from 2011 to 2013 and keeping the liquidity position same in the face of intense competition despite the figure volumes are very large.
References
Nobles, T., Scott, C., McQuaig, D., & Bille, P. (2012). College Accounting. Cengage Learning.
