Construction Economics and finance

Lecture 3
Financial Ratio Analysis

DDIT DIRE DAWA INSITUTE OF TECHNOLOGY

 What is Financial Management?
Financial management is the use of a company’s financial

resources. This includes the use of cash and other assets—such as

equipment.

Many decisions affect a company’s financial future.

For example, the decision to bid on a large project can have great

impact on the finances of a company.

When deciding whether to bid on a project, a manager may need to

address the following questions:
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 What is Financial Management?
Does the company have enough cash resources to perform this
work or will the company need outside financing?

Should the company hire employees to perform the work or should

the company subcontract out this labor?

Should the company lease or purchase the additional equipment

needed for this project?

If the company purchases the equipment, how should it be

financed?

And, finally, what profit and overhead markup should be added to

the bid?, etc.
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 What is Financial Management?
The answers to all of these questions will affect the company’s
finances.

The answer to one of the questions may change the available

options to other questions.

For example, if the manager decides to hire employees to perform

the work on the project, the project will require more financial
resources than if the company had hired subcontractors to perform
the labor and may leave the company with insufficient resources to
purchase the additional equipment, leaving leasing the equipment as
the only option.
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 Financial Ratio Analysis
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 Financial Statements & Financial Ratio Analysis
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 Financial Ratio Analysis
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 Financial Statements & Financial Ratio Analysis
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 Financial Statements & Financial Ratio Analysis
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 Financial Statements & Financial Ratio Analysis
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 Financial Statements & Financial Ratio Analysis
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 Financial Statements & Financial Ratio Analysis
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 Financial Statements & Financial Ratio Analysis
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 Financial Statements & Financial Ratio Analysis
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 Financial Statements & Financial Ratio Analysis
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 Financial Statements & Financial Ratio Analysis
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 Financial Statements & Financial Ratio Analysis
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 Financial Statements & Financial Ratio Analysis
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 Financial Statements & Financial Ratio Analysis
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Thank you !!!

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