Accounting Essay Example | Topics and Well Written Essays - 500 words - 3

Accounting - Essay Example It also caters to a wide variety of financial services like short and long term financing, credit cards, working capital, etc. UPS was founded in 1907 and has its origin in Atlanta, Georgia (United Parcel Services, Inc. (UPS) n.d.). Companies, big or small need to analyze how their business is faring. With big organizations like FedEx Express and UPS, whose operations are from continent to continent, the need to inform its creditors and stockholders how their respective financial operations are faring is essential to attract more solid investments in order to maintain overhead costs, increase yearly profits and gain the public trust for a better flow of business. To identify and project a company’s financial condition, financial ratio analysis is often used to evaluate the financial stability of a certain entity. Financial ration analysis falls into the following categories (Credit Research Foundation, 1999): By taking a look at the above sample computations for FedEx Express and UPS, the ratios indicate that both companies are adequately liquid and could cover up for any financial loss without losing their creditors’ investments. Using financial ratios to directly compare the financial standing of companies using a different accounting method or flow different accounting practices is not feasible. However, there is no world wide standard for calculating the data But if investment is to be made, a good investor would not only look at the financial statements and calculate ratios. Other factors must be taken into consideration like how long has the company been around, the stock value of the company and the coverage of its operations. Given the history of FedEx and UPS it could be seen that United Parcels Services, Inc. has been around longer being founded in 1907 while FedEx was found in 1971. However, investors also look at the fluctuation of stock prices of the company shares. The stock