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    Lecture 3

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    Mengstagegnew
    The document discusses financial management and ratio analysis. It introduces financial management as using a company's financial resources, including cash and assets, to make decisions that impact the financial future. Examples of decisions that affect finances include whether to bid on a large project and how to finance additional equipment. The document then discusses financial ratio analysis, explaining that ratios can be used to analyze a company's liquidity, solvency, operational efficiency, and profitability by comparing financial statement items. Common ratios discussed include the current ratio, debt ratio, and profit margin ratio.

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    Lecture 3

    Uploaded by

    Mengstagegnew
    84 views37 pages
    The document discusses financial management and ratio analysis. It introduces financial management as using a company's financial resources, including cash and assets, to make decisions that impact the financial future. Examples of decisions that affect finances include whether to bid on a large project and how to finance additional equipment. The document then discusses financial ratio analysis, explaining that ratios can be used to analyze a company's liquidity, solvency, operational efficiency, and profitability by comparing financial statement items. Common ratios discussed include the current ratio, debt ratio, and profit margin ratio.

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    Construction Economics and Finance

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    The document discusses financial management and ratio analysis. It introduces financial management as using a company's financial resources, including cash and assets, to make decisions that impact the financial future. Examples of decisions that affect finances include whether to bid on a large project and how to finance additional equipment. The document then discusses financial ratio analysis, explaining that ratios can be used to analyze a company's liquidity, solvency, operational efficiency, and profitability by comparing financial statement items. Common ratios discussed include the current ratio, debt ratio, and profit margin ratio.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    84 views37 pages

    Lecture 3

    Uploaded by

    Mengstagegnew
    The document discusses financial management and ratio analysis. It introduces financial management as using a company's financial resources, including cash and assets, to make decisions that impact the financial future. Examples of decisions that affect finances include whether to bid on a large project and how to finance additional equipment. The document then discusses financial ratio analysis, explaining that ratios can be used to analyze a company's liquidity, solvency, operational efficiency, and profitability by comparing financial statement items. Common ratios discussed include the current ratio, debt ratio, and profit margin ratio.

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    of 37

    Construction Economics and finance

    Lecture 3
    Financial Ratio Analysis

    DDIT DIRE DAWA INSITUTE OF TECHNOLOGY


    What is Financial Management?
    Financial management is the use of a company’s financial

    resources. This includes the use of cash and other assets—such as

    equipment.

    Many decisions affect a company’s financial future.

    For example, the decision to bid on a large project can have great

    impact on the finances of a company.

    When deciding whether to bid on a project, a manager may need to


    address the following questions:
    DIRE DAWA INSITUTE OF TECHNOLOGY 2
    What is Financial Management?
    Does the company have enough cash resources to perform this
    work or will the company need outside financing?

    Should the company hire employees to perform the work or should


    the company subcontract out this labor?

    Should the company lease or purchase the additional equipment


    needed for this project?

    If the company purchases the equipment, how should it be


    financed?

    And, finally, what profit and overhead markup should be added to


    the bid?, etc.
    DIRE DAWA INSITUTE OF TECHNOLOGY 3
    What is Financial Management?
    The answers to all of these questions will affect the company’s
    finances.

    The answer to one of the questions may change the available


    options to other questions.

    For example, if the manager decides to hire employees to perform


    the work on the project, the project will require more financial
    resources than if the company had hired subcontractors to perform
    the labor and may leave the company with insufficient resources to
    purchase the additional equipment, leaving leasing the equipment as
    the only option.
    DIRE DAWA INSITUTE OF TECHNOLOGY 4
    Financial Ratio Analysis
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    Financial Statements & Financial Ratio Analysis
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    Thank you !!!

    DIRE DAWA INSITUTE OF TECHNOLOGY 37

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