IntroductionThis document will discuss the annual report of a manufacturing company. Using the calculated ratios, I will analyze the company's execution. I will understand how the company is performing based on each of the grades recorded. • Return on Assets • Return on Equity • Gross Profit Margin • Debt to Equity Ratio • Debt Ratio • Current Ratio • Quick Ratio • Inventory Turnover • Total Asset Turnover • Price to Earnings Ratio I will also clarify the ratios that have been calculated, I will address several strategies for examining financial statements in addition to ratio analysis. I will also clarify the company's review and make development proposals. The manufacturing company I chose is Johnson & Johnson. Return on Assets Return on assets is an indicator of how profitable an organization is relative to its total assets. ROA reflects on management's ability to use its resources to generate profits. Calculated by dividing an organization's annual profit by its total assets, ROA is shown as a percentage. This is occasionally referred to as “return on investment” (Investopedia, 2014). Net profit divided by average total assets. The calculated asset for Johnson & Johnson would be 10,853,000 / 112,127,500 = 9.7%. Return on Equity Return on equity is a measure of profitability that calculates the number of dollars of benefits an organization creates with each dollar of equity. The formula for ROE is net income divided by average shareholders' equity. The ROE for Johnson & Johnson is 10,853,000 /60,702,500 = 17.9%. ROE is more than a measure of benefit; it is a measure of productivity. An increasing ROE infers that an organization is expanding its capabilities… mid-paper… purchasing, as it may have a simpler upfront rate of development, or some other issue. Then again, it could very well be less expensive. The P/e level is essentially a great starting point when examining cross-stocks (Briefing, 2014) Vertical and Horizontal Analysis Vertical analysis reports each amount on a financial statement as a rate of something else. Vertical analysis of an income statement causes each income statement to appear as a business rate. The horizontal analysis examines financial statement measures from previous years. The same analysis will ruin everything on the balance sheet and everything on the income statement. This allows you to perceive how everything has changed in relation to the progression of different things. Horizontal analysis is also called trend analysis.