Financial Statements of XYZ Company Essay

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Discuss at least 1-2 ratios that you believe are important to ascertain the financial position of the company. Do you believe this company has the means to pay its debt?



Financial ratio analysis makes it possible to examine the financial health of a company. The financial statements of a company provide limited understanding and knowledge into its performance. So as to attain a much stronger and richer insight of what takes place, there has to be a relevant basis of evaluation and appraisal. Various financial ratios are key to ascertaining the financial position of XYZ Company. One of these ratios are profitability ratios, which indicate the ability of a firm to convert its sales into profits. The return on assets of the company is 12.0%, return in equity 21.82% and gross margin 32.21%. This indicates that the company is profitable and therefore in a financially stable position. For instance, for every dollar of sales, the company is able to generate a return of 32.21 cents. Another set of ratios that outline the financial position of a company is liquidity ratios. These financial ratios are ratios that indicate a company's ability to pay for its short-term liabilities. The quick ratio of the company is 1.51 and the current ratio is 2.20. This implies that the current assets of the company are able to cater to the current liabilities of the company in the short-term period within a fiscal year. These ratios indicate that XYZ Company is in a stable financial position based on the financial ratios of the past fiscal year (Atrill and Mclaney, 2013).

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A key ratio that indicates the financial position of the company is the debt coverage ratio. This financial ratio ascertains the capability of a company to generate adequate income in its business operations to cover the expenses of its debt. The debt coverage ratio of the company as indicated is 0.61 and has been below 1 in the current year. This indicates that the firm is not able to generate enough cash to pay its debts (Atrill and Mclaney, 2013).



What do you think are the key risks facing LNG producers in Qatar?



The key risks facing LNG producers in Qatar encompass the growing level of competition. The new LNG supplies recently found in Australia and also new supplies in the United States are increasing in capacity. This implies that Qatar may soon cease being the biggest LNG exporter in the globe. Aside from the risk of Qatar losing their dominance in the world, they face another risk in the fact that other importers in the world….....

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References


Atrill, P. &Mclaney, E., 2013. Accounting and finance for non-specialists. 8th Ed. Harlow, UK: Pearson Publishing.

Euler Hermes. (2016). QATAR. Retrieved from: http://www.eulerhermes.com/economic-research/country-reports/Pages/Qatar.aspx

Global Edge. (2016). Qatar: Risk Assessment. Retrieved from: http://globaledge.msu.edu/countries/qatar/risk

Hudson, M. (2016). Tips to Increase Sales. The Balance. Retrieved from: https://www.thebalance.com/tips-to-increase-retail-sales-2890274

Perumal, S. V. (2016). Qatar taking 'aggressive' stance in Europe to mitigate LNG risks. Gulf Times. Retrieved from: http://www.gulf-times.com/story/517064/Qatar-taking-aggressive-stance-in-Europe-to-mitiga

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