ratios from their financial statements.
Ⅱ. Financial Ratio analysis
1. Liquidity
Liquidity refers to a company's ability to meet its current maturing debts. And it focuses on the relationship between current assets and current liabilities. With it, Creditors and analysts evaluate a company's short-term financial strength.
1.1. cash ratio
it is a means to measure the adequacy o
investors to understand how a company's operations are running, where its money is coming from, and how it is being spent.
Due to the accrual accounting, the income statements released each quarter may not necessarily reflect changes in their cash positions. For example, if a company lands a major contract, this contract would be recognized as revenue (and therefore income), but the company may
ratio than GAP. However the difference between both companies’ Operating Income Margin is decreased apparently in 2008.
(2) Additional Measures of Efficiency
Calculation
Sales / Long Term Assets
Abercrombie 2006 2007 2008
3,318,158 / 1,155,989 3,749,847 / 1,427,343 3,540,276 / 1,763,356
2.87040 2.62715 2.00769
GAP 2006 2007 2008
15,923 / 3,515 15,763 / 3,752 14,526 / 3,559
investors. Especially, although Royal dutch shell has a little up and down change, it is just slight amount and absolute numerical value is higher than Chevron. So it can be said to be more attractive to investors. But Chevron is also attractive.
4. EPS
If EPS shows high ratio, the value to invest this company is increasing.
EPS is measure of return on investment that is based on the number