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I’m writing my RAP on topic 8, my main company is Ford whilst comparator is General Motors. I have done the Business analysis using SWOT and Porters 5 forces but I’m presently stuck with the Financial analysis. I have analyzed the profitability ratios but I’m finding it difficult to analyze the inventory days, trade receivables and payables days and current ratio. Please any tips on what to do?
Hello, a good place to start is a reassessment of your project objectives, which of the generic financial ratios will help you reach your goals? Then look at the common kpis used in the industry and try and see if you can come up with a unique ratio so long as it fits the definition of a “financial ratio”. It is not a must explain a ratio from each of the common ratio categories ( profitability, investors, working capital etc) if you feel working capital ratios are not suitable for your rap you can ignore it. finally, what matters most is the quality of your analysis, 5 to 7 ratios explained properly is good.
Thanks for your reply Hanne. It is really helpful.