StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Financial Analysis: Earnings Per Share and Return on Equity - Assignment Example

Cite this document
Summary
"Financial Analysis: Earnings Per Share and Return on Equity" paper examines the EPS, ROI, and stock prices which are necessary tools to indicate the firm’s performance and management efficiency. It is clear from the analysis that the 7Th year was the best performed followed by the 5th year.  …
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.2% of users find it useful
Financial Analysis: Earnings Per Share and Return on Equity
Read Text Preview

Extract of sample "Financial Analysis: Earnings Per Share and Return on Equity"

An increase in EPS indicates the management’s effectiveness,a higher EPS is hence recommended. From the graph, it is evident that EPS has been fluctuating for the 9year period. The worst periods were year 8 and 10 when the EPS was w9-negative and year 9 when it was 0. In years this year, the stockholders view the management as being inefficient, and hence there is much pressure to improve performance. The 7th year had the best performance with the highest EPS of $3; this is followed by the 5th year and the 6th and 13th respectively.

Return on Equity (ROI)-This measure represents the percentage payback received by shareholders on their equity investments in the business. A higher ratio is recommended since it indicates the firm’s ability to raise revenue from the investments. The 7th year had the best performance with approximately 24% return on equity this was followed by the 5th year; the 7th year exceeded the investor’s expectations while the 5th met the investor’s expectations. This is favorable to the stockholders since it implies that for every dollar invested the shareholder received 24 cents.

The worst periods were the 8th, and 10th years with negative ROI meaning the company was operating at a loss, and the 9th year when the ROI was 0. Stock Prices -Stock prices in most cases show the firm’s performance, a method of communicating to the public. The prices are expected to increase as the company grows. From the graph the investors have been expecting the prices to grow, the 5th and 7th years met these expectation while the rest of the years failed to do so. This is a bad image of the company and shows inefficient operations.

In conclusion, the EPS, ROI, and stock prices are necessary tools to indicate on the firm’s performance and management efficiency. It is clear m the analysis that the 7Th year was the best performed followed by the 5th year. Poor performances were in 8th, 9th and 10th years.

Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Analysis Assignment Example | Topics and Well Written Essays - 250 words - 3”, n.d.)
Analysis Assignment Example | Topics and Well Written Essays - 250 words - 3. Retrieved from https://studentshare.org/finance-accounting/1667760-analysis
(Analysis Assignment Example | Topics and Well Written Essays - 250 Words - 3)
Analysis Assignment Example | Topics and Well Written Essays - 250 Words - 3. https://studentshare.org/finance-accounting/1667760-analysis.
“Analysis Assignment Example | Topics and Well Written Essays - 250 Words - 3”, n.d. https://studentshare.org/finance-accounting/1667760-analysis.
  • Cited: 0 times

CHECK THESE SAMPLES OF Financial Analysis: Earnings Per Share and Return on Equity

Financial Status of Simon Everly Plc

The financial ratios interpreted in this section include all the liquidity ratios, some of the profitability ratios (return on equity and return on capital employed), gearing ratios, interest cover, and some of the investor's ratios.... From the paper "Financial Status of Simon Everly Plc" it is clear that when the share prices of the organization have risen as predictable by the organization, it is expected that the senior executives will get high returns for their investments, thereby, increasing their chances of being wealthy....
10 Pages (2500 words) Essay

Return on Assets Apple Inc

This research paper "return on Assets Apple Inc" is about a major technology company that is in the business of designing, manufacturing, and marketing mobile and media electronic devices, software applications, networking solutions, a range of consumer electronics, and support services.... The return on Assets percentage indicates the profitability of the assets of a business in terms of earning revenue for the business (Brown, 2003).... Ideally, the return on assets should be greater than 5%....
8 Pages (2000 words) Research Paper

Investigating the Suitability of TAQA for Investment

2, and its returns on equity were approximately 0.... 9, and its returns on equity did a lot better coming to 0.... 1, its returns on equity plummeted to 0.... However, TAQA was able to have an appreciable return on assets that worth 0.... As a result of this, the financial performance of TAQA is determined by the trend in the global market.... Although the year 2009 is different because the financial crisis that began in the United States also affected TAQA, bringing its profit margin down to 0....
8 Pages (2000 words) Case Study

Financial Ratios Analysis of Wal-Mart

Graph 01, which highlights the return on equity, demonstrates that the company has experienced a decrease of more than 1 per cent since 2012, highlighting that the financial and operational performance is not generating results for the company and it is becoming very challenging for the current management to increase return on equity.... earnings per share are not attractive enough over these years and this can be supported by the fact that the earnings per share have been diminished more than the level of 2012, reflecting that the share price and financial performance are truly reflecting the overall current and future financial health of the company....
4 Pages (1000 words) Research Paper

Influence of Financial Leverage on Payoffs to Markets and Shareholder Value - London Stock Exchange

The return to the shareholders will be measured through the earning for every share as well as the return on equity ratio whereas the market value will be calculated through price earning ratio and dividend payout.... (2006), financial leverage is employed in magnifying the shareholder's returns and has a basis on the assumption that the fixed costs or charges funds can be acquired as a cost, which is lower than the company rate of return on its assets.... It is the payment of a fixed interest rate for the use of fixed-interest bearing securities, for purposes of magnifying the rate of return as equity shares....
12 Pages (3000 words) Thesis Proposal

Commercial Islamic Banks' Corporate Financial Analysis

The paper 'Commercial Islamic Banks' Corporate financial analysis ' is a forceful example of a finance & accounting report.... financial analysis of companies is normally undertaken so that investors, creditors, shareholders, and other stakeholders can make decisions about the company (Friedlob and Schleifer, 2003).... The paper 'Commercial Islamic Banks' Corporate financial analysis ' is a forceful example of a finance & accounting report.... financial analysis of companies is normally undertaken so that investors, creditors, shareholders, and other stakeholders can make decisions about the company (Friedlob and Schleifer, 2003)....
16 Pages (4000 words)

London Mining Financial Analysis

Moreover, the company shares trade at a discount to the company's net assets at 141p per share.... The paper "London Mining financial analysis" is an amazing example of a Finance & Accounting research paper.... The paper "London Mining financial analysis" is an amazing example of a Finance & Accounting research paper.... The paper "London Mining financial analysis" is an amazing example of a Finance & Accounting research paper....
25 Pages (6250 words) Research Paper

Financial Statement Analysis for JB Hi-Fi

The financial analysis report surveys JB Нi-Fi Company Limited an Australian-based company.... The financial analysis report surveys JB Нi-Fi Company Limited an Australian-based company.... The financial analysis report surveys JB Нi-Fi Company Limited an Australian-based company.... The company's financial status depends on an analysis of its cash flows, income statements, and balance sheet.... Moreover, the financial status of the company is shown by an analysis of financial statement ratios like profitability ratios, liquidity, and activity ratios....
12 Pages (3000 words)
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us