Sample Essay

The financial stability or success of a company can be evaluated by analysing three major areas of a company through financial ratios. The relevant financial ratios used in the analysis of this report are included in Table 1 which includes ratios related to profitability, liquidity, degree of operating leverage and degree of financial leverage. The analysis of profitability, liquidity and leverage and comparison to other sectors in the company is described separately in the section below.

Ratios 2009 2008 2007 2006 2005
Net Profit Margin -15% 13% 12% 12% 14%
ROA -5% 5% 3% 6% 7%
ROE -8% 8% 5% 11% 12%
Current Ratio 0.79 1.30 1.72 0.43 0.95
Quick Ratio 0.73 1.21 1.61 0.39 0.89
DFL 1.59 (0.04) (0.36) 2.32 (0.35)

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