Tuesday, February 06, 2007

I'm RATIO-Overloaded

I'm taking Understanding Financial Report this semester. So we study how to window dress the financial statement to smooth out profit and strengthen the balance sheet; analyse companies' financial statements and annual reports.

In order to master the taught skills, we need to write a 4000 words report on a financial analysis of Persimmon Plc, a listed company in UK. Analysing the performance of a company is all about RATIO calculation. We have too many RATIOs, from profitability to liquidity to share price. We learned more than 30 RATIOs for this assignment.

I see this person's face more than my mum's face because of the assignment.

This uncle is the Chairman of Persimmon Plc. I have to flip to this page and look at him in order to have virtual eye contact for more ideas to be written in my assignment.

Figures..... figures...... and figures everyday

Profit, shareholders' equity, assets, liabilities etc. .........

I listen to radio RATIO everyday because everyone in the class is talking about the assignment. Under this ratio-overloaded condition, i became ratio-sensitive and ratio-allergic.

I've my own RATIO too.

Monthly Expenditure Ratio

Expenditure x 100
Net income

December 2006 :
380 = 160%
January 2007 :
880 = 250%

Analysis: Higher ratio indicates higher expenses. Expenses on January was 90% ahead of December 2006 and further stimulated the economic growth. The surge was mainly due to the purchase of new garments and the payment of affiliation fees. Therefore, the company (me) may experience cash shortfall and the increase in borrowings (credit card).

We have to complete this assignment before Chinese New Year so that everyone is ratio-free after the submission.


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