Analysis of Financial Statements

Analysis of Financial Statements

Companies,which fall in the same industry, may vary in operationssignificantly, for instance, some companies may have better ratiosthan others. Thus, it can be misleading if a comparison was done onthe basis of the developed ratios. Companies will sometimesmanipulate their figures or group them in a specific manner that istotally different from others` leading to better ratios than others.Before a comparison, is made it is crucial to know the details thatfall behind the ratios in order to differentiate between theconcerned companies. At the same time, different amounts of debt andinterest rates paid at a particular time can distort the ratiosmaking it improper to use financial ratios to compare the performanceof different firms.

Inorder to attain its expansion plans TFC ought to incorporate a numberof strategies. TFC ought to consider increasing its sales scope thiswill go a long way increasing its cash margin. The tactic may requirethe company to acquire a bigger location, multiple pricing strategiesand a new or an improved marketing strategy. A large cash inflow isan indication a strong liquidity ratio from the side of the companyit also depicts that assets will be able to outdo the liabilities(Banalieva &amp Dhanaraj, 2013).

Anotherapproach, which the company ought to take to attain its expansionstrategy, is the development of a new market segment or moving to anew geography. Both of these approaches require an outlay of costsand uncertainty. Moving the company`s products to new categories rdemographic segments require an intense market research and testing(Cf-sn.ca, 2015). Management of new remote locations will requiretime and attention from the part of the management. At the same time,management would be required to seek consent from the associatedstakeholders or shareholders. Such an expansion will improve thecompany`s net profit margin that is an important feature toshareholders of the company. Additionally, an expansion is likely toincrease its return on equity due to economies of scale.

References

Banalieva,E., &amp Dhanaraj, C. (2013). Home-region orientation ininternational expansion strategies. JInt Bus Stud,44(2),89-116. doi:10.1057/jibs.2012.33

Cf-sn.ca,(2015). BusinessExpansion: Expansion Strategies.Retrieved 16 January 2015, fromhttp://www.cf-sn.ca/business/business_expansion/expansion.php