Eaton Corp Financial Performance

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Financial Performance Evaluation Introduction Financial Performance evaluation is a very important analysis used for CFO and business managers to identify which aspect of the company are working effectively and which could be improved. The financial performance evaluation is a process that requires the use of different financial ratios to determine results. The most widely financial ratios used when evaluating corporate performance are profitability, asset utilization, liquidity ratios, and capitalization. Profits ratios are the most important and the one of CFO and business manager pay more attention. Profit ratios are used to determine the overall efficiency of the firm in generating returns for its shareholders. Assets utilization ratios help managers to determine how the company is using its assets to generate sales and profits. Liquidity ratios measure the ability of the company to meet its debt obligation on a timely basis. The ratios used to determine liquidity are the current ratio and quick ratio. Capitalization ratios evaluate the financial leverage of a company. The ratios compare the funds using from short and long-term to funds obtained from shareholders. A high ratio of debt to capital increase interest expense and in worst scenarios it puts the company at risk when there are fluctuations in sales volume and cash flow. Objective The objective of this report is to evaluate the financial performance of Eaton Corporation for the three year period 2009, 2010 and 2011. And compare with the industry and its competitors average. To evaluate the financial performance of Eaton Corporation our team has evaluated the Corporation in the following categories. 1. Asset Utilization 2. Operating Performance 3. Liquidity 4. Capital Structure and Solvency 5. Return on Inventory Asset Utilization •

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