Comparing between harvey norman and wesfarmers ( financially) Essay

Comparing between harvey norman and wesfarmers ( financially) - Essay ExampleOn the other hand, stock price appreciates almost alone through good financial results.Through the use of financial analysis, this paper compares the performance of two companies Harvey Norman and Westfarmers in different financial aspects namely liquidity, profitability, addition efficiency and capital structures. The companys ability to generate wealth for its stockholders is the ultimate measure of the financial performance of a business organization and should manufacture the basis of where to invest. It should be noted that as opposed to creditors, companies have little liability to its stockholders. Before dividends are paid, current liabilities are first settled unneurotic with long term obligations. In fact, payments to stockholders are not required. Thus, stockholders have the last claim in the companys earnings and if it is able to keep often for them after other liabilities are settled, the bu siness organizations stock is considered as a better investment.In this consideration, this paper recommends the use of return of comeliness as the sole ratio for the investment decision. Thus, investment in Harvey Norman appears to be more profitable than Westfarmers. It should be noted that during the fiscal year 2007, Harvey Normans return on equity is 26.74% which represents an increase of 8.7% from the 18.04% recorded in 2006. This is much higher than the 0.125% recorded by Westfarmers in 2007. Thus, we recommend that funds should be better invested in Harvey Norman as it has a better ability of maximizing shareholder wealth through higher