Financial Performance
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Financial Performance
The financial performance of a firm in an industry can be evaluated based on industrial performance. This enables us to gauge whether the firm is over or underperforming. There are different metrics applied to measure the performance of a firm. The most applied method is evaluating financial performance over a specified period. All monetary transactions are applied either in the determination of ratios or summation of the amounts to be applied in computation ratios. Ratio analysis is the most applied method, as analyzed below.
Nordstrom Inc’s profitability as compared with overall industrial performance indicates it performed better than most of the firms. Through the application of both horizontal and vertical analysis, various items are computed to determine their contribution to the total amount, either assets or the liabilities and capital applied. Through vertical analysis, all constituent items in comprehensive income were computed against total revenue computed, while those in the balance sheet were computed against total assets for both current and fixed assets. Moreover, both current and long-term liabilities and equity were computed against capital and liabilities.
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Reference
Satchell, S., & Williams, O. (2015). On the Difficulty of Measuring Forecasting Skill in Financial Markets. Journal Of Forecasting, 34(2), 92-113. https://doi.org/10.1002/for.2320