Calculate ratios for each company and analyse and compare the results. Identify two ratios which are generally used to measure gearing/leverage. Perform the calculations for both companies for two years. Compare the gearing/leverage profile of the companies.

Ratio Analysis

You should examine the extent to which the companies (Centrica plc & SSE plc) use ratios to present their results in the latest annual report. Also, you should calculate ratios for each company and analyse and compare the results. Identify two ratios which are generally used to measure gearing/leverage. Perform the calculations for both companies for two years. Compare the gearing/leverage profile of the companies.

Requirement: An excellent analysis of two gearing/ leverage ratios, full calculations given for both companies. Emphasising key variations, what do they highlight about the gearing profiles? Debt/equity commentary? risk profile for each company relevance to ratios? Any shortcomings? Finally, conclude by commenting on the companies use of ratios within their annual report. Comment on the companies’ respective profitability,liquidity and capital structure.