Financial Ratios Analysis

In coiffe to determine the pecuniary health of Wyeth, financial analysts and investors think highly on ratios. Ratios argon important increase tools in financial analysis that help financial analysts give way plans that mend profitability, liquidity, financial structure leverage, and pursuance coverage (Saksonova, 2006). Although ratios are compiled on past records, financial ratios can give us a hint of the future problems. Company - Wyeth ( WYE) Ratio psychoanalysis: Leverage Ratios: Leverage ratios demonstrate how much debt the fellowship is victimization to finance its assets and operations. These ratios are of item worry to investors and suggest a level of jeopardize. Wyeth is more than leveraged (46 cents of every dollar of semipermanent seat of government is in the form of long-term debt) in relation to the application and health care sector. A significant residue of Wyeths chief city structure is financed by long-term, interest bearing debt, which makes them more vulnerable. If Wyeth does non generate enough cash to buckle under debts (principal and interest), Wyeth is at risk towards their creditors and this is a cause of concern, as this will crack out their inflow of working capital. Wyeth is at further risk if returns on their investments fall below the cost of borrowing. [Good]However, this does create an service in that the interest paid on the debt is deductible in determine income subject to income taxes (Mergent Online, 2005).

[Good] Despite the above, Wyeth does have the ability to get wind their annual interest payments with a satisfactory times inte rest earned ratio. Wyeths debt virtue ratio! is declining indicating the issuance of shareholders equity to bring up more capital. [Good] Liquidity Ratios: Liquidity ratios heartbeat a companys short-run ability to generate cash to pay current maturing obligations or in cases of emergency. These ratios are also of particular interest to investors. Wyeth has a high liquidity... If you want to get a full essay, order it on our website: BestEssayCheap.com

If you want to get a full essay, visit our page: cheap essay