Other than the computations used in ratio analysis, what else is necessary to properly analyze a company for investment?

Consider the following scenario for this assignment: You are an external investor who is considering General Machinery as one of the potential companies for investment. Respond to the following in your initial discussion post:

  1. Discuss the major issues facing the company.
  2. Recommend what actions the company should take to improve its overall performance, addressing each of profitability, liquidity, gearing, activity, and shareholder return measures.
  3. In what way does the Statement of Cash Flows help you to interpret the ratios and financial performance of the company?
  4. What information does ratio analysis provide for meeting the requirements of the case questions?
  5. Which ratios are the most important, and which ones are of limited value? Justify your choices for the scenario.
  6. Why do you need to compare:
    • The current year ratios with the prior year ratios?
    • The ratios of competitors in the same industry or some other benchmark?
  7. Other than the computations used in ratio analysis, what else is necessary to properly analyze a company for investment?

Submission Details:

By the due date assigned, post your response to the Discussion AreaThrough the end of the module, read and respond to at least two other classmates’ posts on at least two different days of the week.

Write your initial response in 300–500 words. Your response should be thorough and address all components of the discussion question in detail. Include citations of all sources, where needed, according to the APA style, and demonstrate accurate spelling, grammar, and punctuation.

 

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