E-trade Corporation Essay
E-trade Corporation is a company that buys and sells market securities in the stock exchange. It is the largest deep discount securities in the world. It deals with the provision and order placement of securities such as stocks, bonds, options, futures and mutual funds to customers. It also holds more than $176 million funds as part of its capital which it obtained from the funds the customers of the company invested in it.
Recently the company has reported a decline of its sale volume of its shares by 80% due to a problem known as credit crunch which has occurred to the company. The shares of the company has fallen from $25. 79 to $3. 63 and this has resulted in stiff competition from its competitors such as the Schwab (NASDAQ: SCHW) and TDA Mere trade (NASDAQ:AMTD) who shares have been reported to be stable thus reduced the sales volume of E-Trade Company.
The improved infrastructure and technology of the company has resulted in the improved performance of the company and thus the price of the shares that are offered to the customers of E-Trade have started to the rise in value due to an extensive advertising campaign that has been conducted
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Ratio analysis provides information about the performance, the operations and the state of affairs of a company that are based on the financial statements. The financial statements are identified and interpreted using two variables that are related in the company’s books of accounts. Ratios are used in comparing other company’s that have the same set of financial statements so as to determine the company that performs better than the other the process is often known as trend analysis. . Financial ratios are classified into the following categories liquidity, efficiency and profitability.
Liquidity ratios They are ratios that are used to measure the company’s ability to meet its both short term and long term obligations. The liquidity ratios are classified into current ratios, quick ratios and debt to equity ratio. The current ratio is a liquidity ratio that is used to test the ability of the company to meet its current obligations. It is obtained by dividing total current assets by total current liabilities. The key business ratios and industry ratios are developed and derived from the financial statements of various companies.
The ratios help the investors to compare a company’s financial performance to other companies by using their industry size and region so as to determine which company performs better than the other. Quick ratio It is also known as the acid test ratio. It is a ratio that is used to determine a company’s ability to meet its current obligations. It is obtained by dividing total assets of a company by its total liabilities. Quick ratio = Total Quick Assets/Total current liabilities