Report for potential investor Essay Example | Topics and Well Written Essays - 3500 words

Report for potential investor - Essay ExampleWhen the market will recover, companies with better fundamental state will be the one to come as market leaders and they will yield better results to the investors. So an investor should analyse any caller-out comparison with the industry standards before taking any major(ip) decision.3It reflects how much of the companys total assets are financed by debt or the degree of debt load used by the company. Higher ratio indicates high riskiness of the company and can disturb companys profitability when market conditions are unfavourable. The Gearing symmetryn of M&S for the past quintette years indicates that though it did not maintain any constant trend, but it was in a range of 25-40 percent. So it was found that the companys Debt Ratio is not so very high.17This ratio measures the companys ability to bear its financial burden which arises in form of interest to be paid for debt. This ratio is also known as times interest covered ratio. While calculating this ratio, analysts compare the companys ability to counterbalance the interest with the total interest payable on its debt, so higher ratio is an indicator of more stable state and less risk of inadvertence (Peterson & Fabozzi, 1999, p. 94). The Interest Coverage Ratio of M&S indicates it always has an Interest Cover Ratio greater than 1, or it can be expressed that its Earnings Before Interest and Tax (EBIT) was more than the interest payable. The companys Interest Cover Ratio was constantly increasing, but due to financial downturn and economic slowdown throughout the world, this ratio declined in 2009 as profitability of the company declined.18So after undertaking all the capability ratios of M&S it can be said the company is maintaining higher debt structure in its capital and such financial leveraging is reducing companys ability to retain meet long-term liabilities. But the good aspect is that the companys Interest Coverage Ratio is at a comfortable stat e.18So it can be concluded that the