Financial Ratios Analysis

In rear to determine the monetary health of Wyeth, financial analysts and investors think highly on ratios. Ratios ar important service tools in financial analysis that help financial analysts lend oneself 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 depth psychology: Leverage Ratios: Leverage ratios demonstrate how much debt the fellowship is apply to finance its assets and operations. These ratios are of item disport to investors and suggest a level of encounter. Wyeth is more than leveraged (46 cents of every dollar of semipermanent great is in the form of long-term debt) in relation to the diligence and health care sector. A significant residue of Wyeths detonator structure is financed by long-term, interest bearing debt, which makes them more vulnerable. If Wyeth does not 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 walk of life 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 avail 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 through their annual interest payments with a satisfactory times interest earned ratio. Wyeths debt virtue ra tio is declining indicating the issuance of ! shareholders equity to get more capital. [Good] Liquidity Ratios: Liquidity ratios heartbeat a companys short 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

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