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What is Financial Accounting Ratios Analysis Assignment Help?
Financial Accounting Ratios Analysis assignment help or Financial Accounting Ratios Analysis homework Help refers to the service where we help students in the preparation of their assignment using various accounting ratios. One can understand our approach by seeing the capital structure analysis using financial accounting ratios for Loblaw Company (LLC) and Metro Inc. (MI) companies. This will help student to understand about our financial accounting ratios analysis assignment help or financial accounting ratios Analysis homework help service.
Approach using Examples for Financial Accounting Ratios Analysis Homework Help
Capital Structure Analysis for Financial Accounting Ratios Analysis Assignment Help
Capital structure refers to the way a corporation finances its assets through some combination of equity, debt, or hybrid securities. A firm’s capital structure is then the composition or ‘structure’ of its liabilities. The analysis of capital structure while acquiring the target company plays an important role in the final decision as optimum capital structure helps in developing right synergy whereas unbalanced capital structure creates lot of problem for the parent company.
No doubt debt increases financial risks but debt is preferred as it will help in decrease of the cost of WACC by giving the benefits of tax shield. It also avoids payment of dividend as for investors it is a case of double taxation i.e. first it is tax by the corporation and then it is tax again at the hand of individual investors. Besides these company will have to make more information available for the public if it will select equity options because of change in tax structure for dividend payments. Hence, right mix of debt and equity in the capital structure is quite important while taking decision related to capital structure in acquiring one of LLC and MI.
Analysis of Capital Structure for Financial Accounting Ratios Analysis Homework Help
The capital structure will be analysed using various financial ratios for both the companies. These ratios are important as it speaks about the financial leverage components of the company. It consists of three important types which we will discuss one by one in the coming paragraph as per the value shown in Table.
| Capital Structure Ratio:- LLC | ||
| Year | 2012 | 2013 |
| Debt to Equity ratio | 1.303421 | 1.198288 |
| Debt Ratio | 56% | 54% |
| Equity Ratio | 43% | 45% |
| Capital Structure Ratio:- MI | ||
| Year | 2012 | 2013 |
| Debt to Equity ratio | 0.546252 | 0.599704 |
| Debt Ratio | 0.371331 | 0.345774 |
| Equity Ratio | 0.646725 | 0.625116 |
D/E ratio for Financial Accounting Ratios Analysis Assignment Help
LLC
It basically stands for the ratio between debts as compare to equity components. From the ratio analysis we found that it is on the decreasing trend which shows company is looking for more accurate and stable capital structure. It decreases from 1.30 to 1.19 showing the decreasing dominance of debt for LLC.
MI
From the ratio analysis we found that it is on the increasing trend which shows increasing financial risks for the company as higher debt will increase the interest expense for the MI. It increases from .54 to .59 but still it is much lower compare to LLC.
Debt ratio for Financial Accounting Ratios Analysis Homework Help
LLC
It basically stands for the ratio between debts as compare to total assets. From the ratio analysis we found that it is in decreasing trend. It will decrease the financial risk for the corporation. It decreases from 54% in 2012 to 56% in 2013 showing that now debt is just 54% of total assets. The short term capital form 31.4% of total liabilities in case of LLC.
MI
From the ratio analysis we found that it is in decreasing trend. It will decrease the financial risk for the corporation. It decreases from .37 to .34 in 2013. It is much lower compare to LLC showing the stable capital structure for MI.
Equity ratio for Financial Accounting Ratios Analysis Assignment Help
LLC
It basically stands for the ratio between equity as compare to total assets. From the ratio analysis we found that it is in increasing trend due to decrease in debt as it increases from 43% in 2012 to 45% in 2013. I means now equity compose of 45% of entire capital structure.
MI
From the ratio analysis we found that it is also in decreasing trend due to increase in the debt component. However it is still much lower compare to LLC.
Inference as per Capital Structure for Financial Accounting Ratios Analysis Assignment Help
The entire analysis shows that the capital structure for LLC is moving towards stable side which means that it has right mix of debt and equity and is going to create more value for the LLC Company in the future.
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