Annual Rreport Analysis Coursework Example | Topics and Well Written Essays - 1000 words

Annual Rreport Analysis - Coursework Example More significantly, financial analysis measures the financial performance of a company as in terms of profitability and investment ratios in its operations. As a result, financial analysis of a company, through the financial ratio allows the management to carry out both firms performance and the trend analysis performance for specific years. Sources of Finance More than often, companies have to seek sources of financing requires funds to purchase fixed assets, to finance growth and expansion and to increase its working capital. Nevertheless, these sources of long-term financing are not easily accessible because they include a fixed term contract and large amounts of fund (Brigham & Ehrhardt, 2011). As a result, companies opt to raise long-term capital by issuing shares to shareholders from the public. There are two types of shareholders including equity shareholders who are directly involved in company affairs and the preference shareholders who are entitled to profits before equity shareholders (Davies & Pain, 2011). In addition, companies can use long-term loans as sources of finance from financial institutions. These loans could either be from government or private financial institutions who give long-term loans at reasonable rate of interest and repayment period (Gowthorpe, 2011). More so, the companies can use debentures as there sources of finance that are issued to the public. ... Financial Analysis of TCB bank and Bank of Georgia As financial services provider institutions, both the TCB bank and Bank of Georgia seek these sources of long-term finance to increase their business lines and boost their working capital. As a result, the two companies have shareholders both equity and the preference shareholders who are entitled to profits from the company’s proceedings. In addition, the financial institutions use debentures as there sources of finance from the public who make up the creditors of the companies (Nikolai, Bazley & Jones, 2010). As other financial institutions, the two companies source out for long-term loans as sources of finance from other financial institutions within reasonable rate of interest and repayment period. In addition, the two companies have funds from their retained earnings as sources of long-term finance (Fields, 2011). 1) Profitability Ratio 2011 2010 Return on assets= Net income/ = 91,625 /2783901=0.033 49,435/2002900.5=0.025 TCB Bank Total average asset Return on assets= Net income/ = 138973/ 4182165=0.033 78043/ 4004922=0.019 Bank of Georgia Total average asset Return on equity=Net income/ = 91,625 / 423026.5 =0.217 49,435/352007.5=0.140 TCB Bank Average stockholders’ equity Return on equity=Net income/ = 138973/918677.5=0.151 78043/812,603=0.096 Bank of Georgia Average stockholders’ equity Net Profit margin= Net Income/ Sales = 91,625 /209,081=0.438 49,435/162,814=0.304 TCB Bank (TCB Bank, 2012) Net Profit margin= Net income/ Sales = 138973/360,215=0.386 78043/413673=0.189 Bank of Georgia Gross Profit margin= Gross Income/ Sales = 209,081/ 360,215=0.580 162,814/ 271,805=0.600 TCB Bank Gross