1. Dedication
I dedicating my valuable project to our parents, Profs, friends and to the whole class.
Acknowledgement
I thank to our Allah AL-Mighty and off course thankful to our honorable teacher who has always been guiding us in a good way through understanding this course as well as the whole project. He has given us an opportunity to show abilities in the subject. I also like to thank our class mates because of their friendly attitude and maintaining lovely environment in the class.
Income statement
Period EndingSep 30, 2009Sep 30, 2008Sep 30, 2007AssetsCurrent AssetsCash And Cash Equivalents74,59114,89952,746Short Term Investments- 57,21031,057Net Receivables150,046198,959177,669Inventory117,318231,479163,196Other Current Assets26,82859,36142,667Total Current Assets 368,783 561,908 467,335 Long Term Investments44,97343,31445,436Property Plant and Equipment859,990826,990805,064Goodwill- - 33,595Intangible Assets- - - Accumulated Amortization- - - Other Assets482,999340,443289,723Deferred Long Term Asset Charges5,273- - Total Assets 1,762,018 1,772,655 1,641,153 LiabilitiesCurrent LiabilitiesAccounts Payable141,168454,775401,051Short/Current Long Term Debt129,80016040,160Other Current Liabilities28,17224,26932,454Total Current Liabilities 299,140 479,204 473,665 Long Term Debt389,240389,181355,522Other Liabilities300,412194,563157,946Deferred Long Term Liability Charges256,196222,761225,068Minority Interest- - - Negative Goodwill- - - Total Liabilities 1,244,988 1,285,709 1,212,201 Stockholders' EquityMisc Stocks Options Warrants- - - Redeemable Preferred Stock- - 627Preferred Stock- 467- Common Stock517,03021,99321,646Retained Earnings- 312,808268,761Treasury Stock- - - Capital Surplus- 147,241136,061Other Stockholder Equity- 4,4371,857Total Stockholder Equity 517,030 486,946 428,325 Net Tangible Assets $517,030 $486,946 $394,730
Period EndingSep 30, 2009Sep 30, 2008Sep 30, 2007Total Revenue 1,895,198 2,208,973 2,021,594 Cost of Revenue27,8181,962,870797,924Gross Profit 1,867,380 246,103 1,223,670 Operating ExpensesResearch Development- - - Selling General and Administrative1,705,56599,4531,084,324Non Recurring- - - Others36,75135,30334,080Total Operating Expenses- - - Operating Income or Loss 125,064 111,347 105,266 Income from Continuing OperationsTotal Other Income/Expenses Net1,4531,8816,812Earnings Before Interest And Taxes126,517113,228112,078Interest Expense29,74629,47737,229Income Before Tax96,77183,75174,849Income Tax Expense32,50926,19025,035Minority Interest- (35)(43)Net Income From Continuing Ops64,24757,52649,771Non-recurring EventsDiscontinued Operations- 20,396- Extraordinary Items- - - Effect Of Accounting Changes- - - Other Items- - - Net Income 64,247 77,922 49,771 Preferred Stock And Other Adjustments(15)- - Net Income Applicable To Common Shares $64,232 $77,922 $49,771
Ratio Analysis
Liquidity Ratio:

• 20082009Current Ratio:Current Ratio=CurrentAssetsCurrent LiabilityCurrent Ratio=$561,908$479,204 Current Ratio:Current Ratio=CurrentAssetsCurrent LiabilityCurrent Ratio=$368,783 $299,140 Current Ratio=1.17%Current Ratio=1.23%

Interpretation:
Current ratio measures whether or not a company has enough resources to pay its debt over the next business cycle.The higher the current ratio is, the more capable the company is to pay its obligations. In 2009 current ratio is comparatively below than the previous year. In 2009 current liabilities exceed current assets.This shows that the company may have problems paying its bills on time.

20082009Quick Ratio:Quick Ratio=CurrentAssets-InventoryCurrent LiabilityQuick Ratio=$561,908 -$231,479$479,204 Quick Ratio:Quick Ratio=CurrentAssets-InventoryCurrent LiabilityQuick Ratio=$368,783 -$117,318$299,140 Quick Ratio=0.68%Quick Ratio=0.84%

Interpretation:
Quick Ratio is also known as the " acid test"ratio; it is a refinement of the current ratio and is a more conservative measure of liquidity. The ratio expresses the degree to which a company's current liabilities are covered by the most liquid current assets. The quick ratio is incresing from previous year. It seems that company caring asses liabilities.

Profitability Ratio:

20082009Gross Profit Margin:Gross Profit Margin=Gross ProfitNet Sale100Gross Profit Margin=$246,103 $2,208,973 100Gross Profit Margin:Gross Profit Margin=Gross ProfitNet Sale100Gross Profit Margin=$1,867,380 $1,895,198 100Gross Profit Margin=11.14%Gross Profit Margin=98.53%

Interpretation:
Gross profit margin measures company's manufacturing and distribution efficiency during the production process. Gross profit increases from 2008 to 2009 .The cost of goods sold slightly increase as compare to previous..

20082009Operating Profit Margin:Operating Profit Margin=Operating ProfitNet Sale100Operating Profit Margin=$111,347 $2,208,973 100Operating Profit Margin:Operating Profit Margin=Operating ProfitNet Sale100Operating Profit Margin=$125,064 $1,895,198 100Operating Profit Margin=5.04%Operating Profit Margin=6.60%

Interpretation:
Operating margin is used to measure company's pricing strategy and operating efficiency. Operating profit is increasing as compare to previous year. It shows that the company is earning more on per dollar of Sale. This high profit also shows that sales are increasing faster than cost and the firm is in a relatively liquid position.

20082009Net Profit Margin:Net Profit Margin=Net Profit After TaxNet Sale100Net Profit Margin=$77,922 $2,208,973 100Net Profit Margin:Net Profit Margin=Net Profit After TaxNet Sale100Net Profit Margin=$64,2471,895,198 100Net Profit Margin=3.52%Net Profit Margin=3.38%

Interpretation:
There is little bit decrease in the net profit margin which is a good sign of company efficiency and also shows that company reduces its expense. Increase in net profit also indicates that company efficiently converts its revenue into actual profit.

20082009Return on Total Assets:Return on Total Assets=Net Profit After TaxTotal Assets100Return on Total Assets=$77,922$1,772,655 100Return on Total Assets:Return on Total Assets=Net Profit After TaxTotal Assets100Return on Total Assets=$64,247$1,762,018 2100Return on Total Assets=4.39%Return on Total Assets=3.64%

Interpretation:
Return on Assets shows how many dollars of earnings result from each dollar of assets the company controls. Return on total assets decrease from 4.39% to 3.64% which indicate that company is not efficiently use its assets to generate profit.

20082009Return on Total Equity:Return on Total Equity=Net Profit After TaxTotal Equity100Return on Total Equity=$77,922$486,946 100Return on Total Equity:Return on Total Equity=Net Profit After TaxTotal Equity100Return on Total Equity=$64,247$517,030 100Return on Total Equity=16.00%Return on Total Equity=12.43%

Interpretation:
Return on Equity is also referred as Stockholder's return on investment, it tells the rate that shareholders are earning on their shares. LG is earning a very low on shareholder's equity as compare to the previous year. It shows the weakness of company..
Debt Ratio:

20082009Time Interest Earned Ratio:Time Interest Earned Ratio=EBITInterestTime Interest Earned Ratio=$111,347 $29,477Time Interest Earned Ratio:Time Interest Earned Ratio=EBITInterestTime Interest Earned Ratio=$125,064 $29,746Time Interest Earned Ratio=3.77 TimesTime Interest Earned Ratio=4.20 Times

Interpretation:
Time interest earned ratio also known as interest coverage ratio. Times Interest Earned is a great tool to measure a company's ability to meet its debt obligations. In 2009 there is aincrease from 3.77 times to 4.20 times. It shows that the company has generating enough cash from its operations EBIT to meet its interest obligations.

20082009Debt Ratio:Debt Ratio=Total DebtTotal Assets100Debt Ratio=$38,9341$1,772,655 100Debt Ratio:Debt Ratio=Total DebtTotal Assets100Debt Ratio=$51,9040$1,762,018 100Debt Ratio=21.96%Debt Ratio=29.45%

Interpretation:
This ratio expresses the relationship between capital contributed by creditors and that contributed by owners. It expresses the degree of protection provided by the owners for the creditors. The debt ratio in 2009 seems to increasingas compare to previous year show that company increase their debt. It is the weakness of company..

20082009Debt to Equity Ratio:Debt to Equity Ratio=Long Term DebtTotal EquityDebt to Equity Ratio=$389,181$486,946 Debt to Equity Ratio:Debt to Equity Ratio=Long Term DebtTotal EquityDebt to Equity Ratio=$389,240$517,030Debt Ratio=0.79%Debt Ratio=0.75%

Interpretation:
There is a bit fall fall in debt to equity ratio as compare to previous year. It is the strength of company.
Activity Ratio:

20082009Average Age of Inventory:Average Age of Inventory=No.of Days In YearInventory TurnoverInventory Turn Over Ratio=Cost of Goods SoldAverage InventoryAverage Inventory=$117,318+$231,4792Average Inventory=$174398.5Inventory Turn Over Ratio=$1,962,870$174398.5Inventory Turn Over Ratio=11.22Average Age of Inventory=36511.22Average Age of Inventory:Average Age of Inventory=No.of Days In YearInventory Turnover Inventory Turn Over Ratio=Cost of Goods SoldAverage InventoryAverage Inventory=$117,318+$231,4792Average Inventory=$174398.5Inventory Turn Over Ratio=$427,818$174398.5Inventory Turn Over Ratio=2.45Average Age of Inventory=3652.45Average Age of Inventory=32.53daysAverage Age of Inventory=148 days

Interpretation:
Average age of inventory is the average number of days it takes for a company to sell a product. In 2009 average age of inventory increasing . It shows that firm is not properly managing its inventory and it also the strength of company.

20082009Average Collection Period:Average Collection Period=No.of days in yearA/R turnover ratioA/R Turnover ratio=Net SaleAccounts ReceivableAccount Receivable turnover ratio=$2,208,973 $198,959Account Receivable turnover ratio=11Average Collection Period=36511Average Collection Period:Average Collection Period=No.of days in yearA/R turnover ratio A/R Turnover ratio=Net SaleAccounts ReceivableARturnover ratio=$,895,198 $150,046Account Receivable turnover ratio=6Average Collection Period=3656Average Collection Period=33.18 DaysAverage Collection Period=60 days

Interpretation:
The average collection period ratio represents the average number of days for which a firm has to wait before its receivables are converted into cash. Average collection period is very bad because previously we receive collection in 33.18 days and in current year we are receiving collection in 60 days. It is also the weakness of company and it also show the management of company is not good.

20082009Average Payment Period:Average Payment Period=No.of days in yearA/P turnover ratioA/P Turnover ratio=Net SaleAccounts PayableAccount Payable turnover ratio=$2,208,973 $454,775Account Payable turnover ratio=4.85Average Collection Period=3654.85Average Payment Period:Average Payment Period=No.of days in yearA/P turnover ratio A/P Turnover ratio=Net SaleAccounts PayableAccount Payable turnover ratio=$1,895,198 $141,168Account Payable turnover ratio=13.42Average Collection Period=36513.42Average Payment Period=75.25 DaysAverage Payment Period=27.19 Days

Interpretation:
Average payment period ratio represents the average number of days taken by the firm to pay its creditors. Average payment period is very bad because previously we are paying collection in 75.25 days but in current year we are paying collection in 27.19 days .
nokia
View: Annual Data | Quarterly DataAll numbers in thousandsPeriod EndingDec 31, 2009Dec 31, 2008Dec 31, 2007Total Revenue 58,802,000 71,485,887 75,203,328 Cost of Revenue39,772,00046,995,16949,716,267Gross Profit 19,031,000 24,490,718 25,487,062 Operating ExpensesResearch Development8,478,0008,413,0908,317,466Selling General and Administrative7,533,0009,077,0585,408,489Non Recurring1,303,000- - Others- - - Total Operating Expenses- - - Operating Income or Loss 1,717,000 7,000,570 11,761,107 Income from Continuing OperationsTotal Other Income/Expenses Net(337,000)266,433480,165Earnings Before Interest And Taxes1,380,0007,267,00412,241,272Interest Expense- 260,79563,335Income Before Tax1,380,0007,006,20912,177,937Income Tax Expense1,007,0001,523,8862,241,754Minority Interest- 139,560676,061Net Income From Continuing Ops373,0005,621,88410,612,245Non-recurring EventsDiscontinued Operations- - - Extraordinary Items- - - Effect Of Accounting Changes- - - Other Items- - - Net Income 373,000 5,621,884 10,612,245 Preferred Stock And Other Adjustments- - - Net Income Applicable To Common Shares $373,000 $5,621,884 $10,612,245
View: Annual Data | Quarterly DataAll numbers in thousandsPeriod EndingDec 31, 2009Dec 31, 2008Dec 31, 2007AssetsCurrent AssetsCash And Cash Equivalents1,639,0002,404,9483,129,913Short Term Investments11,092,0007,209,20614,181,081Net Receivables11,471,00013,455,58716,726,252Inventory2,676,0003,570,7704,236,060Other Current Assets7,002,0007,854,8484,873,826Total Current Assets 33,879,000 34,495,359 43,147,133 Long Term Investments960,000895,160995,680Property Plant and Equipment2,679,0002,946,2732,816,185Goodwill7,419,0008,820,4932,038,494Intangible Assets3,963,0005,860,1234,029,854Accumulated Amortization- - - Other Assets214,00014,09764,808Deferred Long Term Asset Charges2,162,0002,767,2412,287,414Total Assets 51,276,000 55,798,745 55,379,567 LiabilitiesCurrent LiabilitiesAccounts Payable16,434,00017,266,00620,897,505Short/Current Long Term Debt1,106,0005,062,2331,577,476Other Current Liabilities4,251,0006,366,2055,474,769Total Current Liabilities 21,791,000 28,694,444 27,949,750 Long Term Debt- - - Other Liabilities6,454,0001,311,021474,274Deferred Long Term Liability Charges1,869,0002,519,1341,418,403Minority Interest2,383,0003,245,1293,777,989Negative Goodwill- - - Total Liabilities 30,114,000 35,769,728 33,620,415 Stockholders' EquityMisc Stocks Options Warrants- - - Redeemable Preferred Stock- - - Preferred Stock- - - Common Stock353,000346,786362,333Retained Earnings14,537,00016,482,21220,429,123Treasury Stock(977,000)(2,651,646)(4,633,743)Capital Surplus400,000623,087948,548Other Stockholder Equity4,465,0005,228,5774,652,891Total Stockholder Equity 18,778,000 20,029,018 21,759,152 Net Tangible Assets $7,396,000 $5,348,402 $15,690,804
Ratio Analysis
Liquidity Ratio:

20082009Current Ratio:Current Ratio=CurrentAssetsCurrent LiabilityCurrent Ratio=$34,495,359 $28,694,444 Current Ratio:Current Ratio=CurrentAssetsCurrent LiabilityCurrent Ratio=$33,879,000 $21,791,000 Current Ratio=1.20%Current Ratio=1.55%

Interpretation:
Current ratio measures whether or not a company has enough resources to pay its debt over the next business cycle. In 2009 current ratio is comparatively above than the previous year. In 2009 current assets exceed Current liabilities.This shows that the company is capable to pay its obligations.

20082009Quick Ratio:Quick Ratio=CurrentAssets-InventoryCurrent LiabilityQuick Ratio=$34,495,359-$3,570,770$28,694,444Quick Ratio:Quick Ratio=CurrentAssets-InventoryCurrent LiabilityQuick Ratio=$33,879,000-$2,676,000$21,791,000Quick Ratio=1.07%Quick Ratio=1.43%

Interpretation:
Quick Ratio is also known as the " acid test"ratio; it is a refinement of the current ratio and is a more conservative measure of liquidity. The ratio expresses the degree to which a company's current liabilities are covered by the most liquid current assets. There is a slightly increase in the quick ratio as compare to previous year. This indicates that the company relies too much on inventory or other assets to pay its short-term liabilities.

Profitability Ratio:

20082009Gross Profit Margin:Gross Profit Margin=Gross ProfitNet Sale100Gross Profit Margin=$24,490,718 $71,485,887100Gross Profit Margin:Gross Profit Margin=Gross ProfitNet Sale100Gross Profit Margin=$19,031,000 $58,802,000 100Gross Profit Margin=34.25%Gross Profit Margin=32.36%

Interpretation:
Gross profit margin measures company's manufacturing and distribution efficiency during the production process. Gross profit decrease in 2009 as compare to 2008. Which is not better than previous year.

20082009Operating Profit Margin:Operating Profit Margin=Operating ProfitNet Sale100Operating Profit Margin=$7,000,570 $71,485,887 100Operating Profit Margin:Operating Profit Margin=Operating ProfitNet Sale100Operating Profit Margin=$1,717,000 $58,802,000100Operating Profit Margin=9.79%Operating Profit Margin=2.91%

Interpretation:
Operating profit margin is used to measure company's pricing strategy and operating efficiency. In operating profit margin there is a great change as compare to previous year. Operating profit decreases. It shows that the company is earning less as compare to previous years..

20082009Net Profit Margin:Net Profit Margin=Net Profit After TaxNet Sale100Net Profit Margin=$5,621,884$71,485,887100Net Profit Margin:Net Profit Margin=Net Profit After TaxNet Sale100Net Profit Margin=$373,000$58,802,000100Net Profit Margin=7.86%Net Profit Margin=0.63%

Interpretation:
Net profit margin measures how much of each dollar earned by the company is translated into profits. Net profit margin provides clues to the company's pricing policies, cost structure and production efficiency. There is huge decreasein the net profit margin than previous year. It shows that company in bad condition..

20082009Return on Total Assets:Return on Total Assets=Net Profit After TaxTotal Assets100Return on Total Assets=$5,621,884$55,798,745 100Return on Total Assets:Return on Total Assets=Net Profit After TaxTotal Assets100Return on Total Assets=$373,000$51,276,000 100Return on Total Assets=10.07%Return on Total Assets=0.72%

Interpretation:
Return on Assets shows how many dollars of earnings result from each dollar of assets the company controls. Return on total assets decrease from 10.07% to 0.72% and this is big change which indicate that company is not doing well.

20082009Return on Total Equity:Return on Total Equity=Net Profit After TaxTotal Equity100Return on Total Equity=$5,621,884$20,029,018100Return on Total Equity:Return on Total Equity=Net Profit After TaxTotal Equity100Return on Total Equity=$373,000$18,778,000100Return on Total Equity=28.06%Return on Total Equity=1.98%

Interpretation:
Return on Equity is also referred as Stockholder's return on investment, it tells the rate that shareholders are earning on their shares. Nokia is earning 1.98% on shareholder's equity as compare to the previous year. It indicates the weakness of company.
Debt Ratio:

20082009Time Interest Earned Ratio:Time Interest Earned Ratio=EBITInterestTime Interest Earned Ratio=$7,267,004$400355Time Interest Earned Ratio:Time Interest Earned Ratio=EBITInterestTime Interest Earned Ratio=1,380,0000Time Interest Earned Ratio=18.15 TimesNOTE.Not interest avilable in 2009

Interpretation:
Time interest earned ratio also known as interest coverage ratio. Times Interest Earned is a great tool to measure a company's ability to meet its debt obligations. In 2009 there is increase from 0.30 to 3.24%. It shows that the company is able to meet its interest obligations because earnings are significantly greater than annual interest obligations.

20082009Debt Ratio:Debt Ratio=Total DebtTotal Assets100Debt Ratio=$5,062,233$55,798,745 100Debt Ratio:Debt Ratio=Total DebtTotal Assets100Debt Ratio=$1,106,00051,276,000 100Debt Ratio=9.07%Debt Ratio=2.15%

Interpretation:
This ratio expresses the relationship between capital contributed by creditors and that contributed by owners. It expresses the degree of protection provided by the owners for the creditors. The debt ratio in 2009 seems to be slightly decreasedas compare to previous year and tis is not good sign for Nokia company.This ratio indicates that company increases their debt.

20082009Debt to Equity Ratio:Debt to Equity Ratio=Long Term DebtTotal EquityDebt to Equity Ratio=5,062,233$20,029,018 Debt to Equity Ratio:Debt to Equity Ratio=Long Term DebtTotal EquityDebt to Equity Ratio=1,106,000$18,778,000Debt Ratio=0.25%Debt Ratio=0.05%

Interpretation:
Debt to equity ratio seems to be decrease as compare to previous years.. this indicates that company has nofinanced its growth mostly via debt.
Activity Ratio:

20082009Average Age of Inventory:Average Age of Inventory=No.of Days In YearInventory TurnoverInventory Turn Over Ratio=Cost of Goods SoldAverage InventoryAverage Inventory=$2,676,000Inventory Turn Over Ratio=$71,485,887 $2,676,000Inventory Turn Over Ratio=26.71Average Age of Inventory=36526.71Average Age of Inventory:Average Age of Inventory=No.of Days In YearInventory Turnover Inventory Turn Over Ratio=Cost of Goods SoldAverage InventoryAverage Inventory=$2,676,000Inventory Turn Over Ratio=$58,802,000 $2,676,000Inventory Turn Over Ratio=21Average Age of Inventory=36521Average Age of Inventory=13.66 daysAverage Age of Inventory=17.3 days

Interpretation:
Average age of inventory is the average number of days it takes for a company to sell a product. In 2009 average age of inventory increase.. It shows that firm is not properly managing its inventory and it also the strength of company.

20082009Average Collection Period:Average Collection Period=No.of days in yearA/R turnover ratioA/R Turnover ratio=Net SaleAccounts ReceivableAR turnover ratio=$71,485,887 $13,455,587Account Receivable turnover ratio=5.31Average Collection Period=3655.31Average Collection Period:Average Collection Period=No.of days in yearA/R turnover ratio A/R Turnover ratio=Net SaleAccounts ReceivableAR turnover ratio=$58,802,000 $11,471,000Account Receivable turnover ratio=5.13Average Collection Period=3655.13Average Collection Period=68.73 DaysAverage Collection Period=71.15 Days

Interpretation:
The average collection period ratio represents the average number of days for which a firm has to wait before its receivables are converted into cash. Average collection period is no good because previously we receive collection in 68.73 days and in current year we are receiving collection in 71.15 days. It is also the weakness of company.

20082009Average Payment Period:Average Payment Period=No.of days in yearA/P turnover ratioA/P Turnover ratio=Net SaleAccounts PayableAccount Payable turnover ratio=$71,485,887$17,266,006Account Payable turnover ratio=4.14Average Collection Period=3654.14Average Payment Period:Average Payment Period=No.of days in yearA/P turnover ratio A/P Turnover ratio=Net SaleAccounts PayableAccount Payable turnover ratio=$58,802,000 $16,434,000Account Payable turnover ratio=3.57Average Collection Period=3653.57Average Payment Period=88.14 DaysAverage Collection Period=102.24 Days

Interpretation:
Average payment period ratio represents the average number of days taken by the firm to pay its creditors. Average payment period is very good because previously we are paying collection in 88.14days but in current year we are paying collection in 102.24 days. It shows that management of company is quite good.
Conclusion
I have calculated the ratio of LG and Nokia from this i understands the strength and weakness of both company. The main purpose of this project is to how to invest in a company. Which factors is important for investor while investing in any company. A financial Ratio analysis also tells us that which companies it better or profitable. I take the decision of investment on following ratios such as net profit, return on total assets, return on total equity and debt ratio. The comparison of net profit of both company shows that LG has greater profit than Nokia. Return on total asset is also better of LG as compare to Nokia. Return on total equity of is not good for 2009.. It is clear that LGpay more dividends to stockholders of a company.