Use analytical techniques to evaluate the relative financial health of both of these organizations.

Account 611, Financial Report Project, Winter 2017, page 1 of 7.

It is crucial to apply analytical tools such as ratio analyses to evaluate the relative financial performance of two companies. You can use metrics to determine their financial health, such as the current ratio that provides an insight into liquidity or their return on asset which indicates how efficiently management utilizes available resources. Using debt ratios, companies can determine if they have over-risked themselves. Profitability indicators are used to measure whether profit is being made.

These ratios indicate that the first organization may have a higher debt and current ratio than the second, indicating more liquidity and less liability. In addition, the second organization has slightly less profit than its counterpart. However, this may be due to differences in assets.

By analyzing the financial performance of both companies, it is possible to get a better understanding about which organization may be more attractive for investors in the future.