Johnson Matthey Plc Financial Position and Performance

Johnson Matthey Plc Financial Position and Performance

Financial Analysis is defined as being the process of identifying financial strength and weakness of a business by establishing relationship between the elements of balance sheet and income statement. The information pertaining to the financial statements is of great importance through which interpretation and analysis is made. Financial statement analysis provides information to those interested in the financial condition and operating results of a company.

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When financial statement items are considered individually, they usually will have a limited significance. A better perspective is gained when comparisons are made with previous statements, other businesses and industry averages.

It is through the process of financial analysis that the key performance indicators, such as, liquidity solvency, profitability as well as the efficiency of operations of a business entity may be ascertained, while short term and long term prospects of a business may be evaluated. Thus, identifying the weakness, the intent is to arrive at recommendations as well as forecasts for the future of a business entity. Review of Literature John Irron (2010) in his study “Financial Statements why it is important for all business?” states that the purpose of financial statements is to give information regarding the

JOHNSON MATTHEY PLC FINANCIAL POSITION AND PERFORMANCE 3 financial situation, performance and changes in financial situation of a venture that is helpful to a wide range of users in making financial decisions. Financial statements should be comprehensible, appropriate, reliable and comparable.

James Clausen (2009), in this article he barfly express about the liquidity ratio. He Pronounce that it is analysis of the financial statements is used to measure company performance. It also analyses of the income statement and balance sheet by using ratio analyses to determine a company’s profitability and liquidity. If the ratios indicate poor performance, investors may be reluctant to invest.

Therefore, the current ratio or working capital ratio, measures current assets against current liabilities. The current ratio measures the company’s ability to pay back its short-term debt obligations wi……………

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