Financial ratio analysis Assignment Example | Topics and Well Written Essays - 750 words

Financial ratio analysis - Assignment Example However, the intention of the ratio computation in this case is for the investment viability and this implies that the relevant explanation of the ratios will be offered. We consider the current ratio, which helps in determining the financial position or ability of an organization to meet its short term obligation. The following formula is used to compute the current ratio A current ratio of 2:1 is considered to be most adequate for numerous organizations in testing the liquidity ratio. In this case, the two organizations are considered to be relatively able to meet their short term obligations. The profit margins indicates that the DOHA Bank is more profitable compared to the Commercial Banks of Qatar. In 2013, the DOHA Bank recorded 0.54 while the CBQ recorded 0.467. On the other hand, in 2012, the DOHA Bank recorded 0.85 while CBQ recorded 0.674 (Chesnick & United States, 2000). This is clear that the DOHA Bank is more viable for investment compared to the Commercial Banks of Qatar. From the debit ratio figures, the two companies seem to be spending nearly the same amount of debts to finance their organizations’ growth and development. This has an impact of creating volatile earnings (Chesnick & United States, 2000). However, DOHA Bank appears to be spending a little bit more in its operations and this explains that, it is able to generate more earnings, which are spread to the shareholders in terms of dividends. These ratios help the business to know whether it is meeting its goals of generating profits and satisfying the clients. In this case the total assets turn over will be computed using the following formula. These ratios indicate that the market viability of the two organizations is sound and they can thrive well, since their book value is almost the same as the market values of the shares (Chesnick & United States, 2000). From the above ratio analysis, it can be concluded that the DOHA Banks has more