s of their enterprises. Consulting, education and support revenues increased 7% to 1.5 billion (Oracle Corporation, 2000c).CHAPTER IIFINANCIAL ANALYSISSince its creation, Oracle Corporation has steadily grown within its market, as have its revenues. The question then rises: Would I invest my hard earned money in this company? To answer this question, a Financial Analyst would first look at many different analytical ratios to determine Oracle Corporation’s future potential on the stock market. Liquidity RatiosThe first would be a liquidity ratio called a current ratio. Liquidity ratios tell an analyst how liquid a company is or how much cash on hand they have to pay off current debts or liabilities. Taking the company’s current assets and dividing by their current liabilities calculates a current ratio (Moyer, McGuigan, Kretlow 1999, 72-3). In Oracle’s case, their current ratio is 1.86 and compared to the industry average of 3.75, this tells me that they are liquid or have enough cash on hand to pay off all liabilities but that they are below the industry average (Oracle Corporation, 2000b). Asset Management RatiosTaking sales and dividing by total assets calculate the Asset Turnover ratio. This figure will let an analyst know how effectively a company utilizes its resources in order to produce sales. Oracle’s is 1.25 and the Industry average is 0.72 which indicates that Oracle is doing a positive job in resource management for the purpose of increasing sales and is doing it better than the average software and programming company (Oracle Corporation, 2000d). Financial Leverage Management RatiosNext, we will look at Oracle’s Financial Leverage Management ratios to help determine their ability to receive funds from creditors. The first ratio we will take a look at is the Debt ratio, which indicates how much of the corporation’s total assets are financed with credit. In 1996 it was 44%, in 1...
