STATISTICS PROJECT 1
Financialratios are the best measures of the firm’s performance (Sena,& Olsen, 2014).The ratios provide vital information to the investors especially whenassessing the profitability of their firm. Investors also use theconcept of ratio analysis in evaluating the riskiness of the firm inwhich they intend to invest into. For example, in this exercise, wecan deduce that there is little risk that Microsoft Corp may failfinancially or face financial distress in the current future (NB.Calculations for the ratios in the excel worksheet attached). Thecompany is more profitable for the past few years as compared totheir competitors. Therefore, ratios indicate the financialdifficulties (Sena,& Olsen, 2014).Current ratio and debt ratio are more necessary in measuring theperformance of the firm although not sufficient.
Microsoftand Apple considered in this study started from a position of beingmore vulnerability and tended to become great by choice. This is asevident from the financial performance revealed by the ratioanalysis. Microsoft has not shown any risk of the uncertainenvironment. A research carried out by Collins showed that companiesin the same environment or in the same industry tend to experiencethe same extreme environment (Sena,& Olsen, 2014).
Theobservation made here is that, a relevant test of the firm’sability to cope with the market environment by comparing theoperations and performance. The test carried out in this study wasspecifically for assessing the profitability of the firms. It istherefore the task of the financial managers to measure the firm’sperformance in order to determine the financial consequences andrecommend how the assets in the firm should be used to obtain optimalprofitability and attract more investors. The managers should also becapable of analysing, communicating and making decisions based on thefinancial information gathered.
Sena, J., & Olsen, E. (2014). Microsoft vs Apple: Which is Great by Choice