Executive SummaryThis is the age of parsimony. All the individuals in this world need to make the right use of theirsresources and to do this properly financial management can be a great resort. This will lead theindividuals and the institutions to the path of achieving the particular objectives.Financial ratio analysis is an integral part of financial management. It is essential to continuouslymonitorthefinancial ratiostomakeprudent judgement about different firmsregardingtheirfinancial performances.Inthisparticular businessreport thefinancial ratiosof twobankingindustrygiantsnamelyHS! Holdings plc and arclays "lc have been analysed. After the analysis important insightshave been drawn out. These insights tell that if any investor has only two options of investment#he will obviously go for investing in HS!.Thisreport divulgesomemajorweaknessesofusingthefinancial ratios.Theintendedusersshould be concerned about these. At last some recommendations have been demonstrated for theease of the intended users of this report. 1Table of ContentsExecutive Summary.................................................................................................... 1Introduction................................................................................................................ 3Selected companies and the justifcations behind their inclusion..............................3inancial !atio "nalysis.............................................................................................. #inancial !atio......................................................................................................... #"nalysin$ the proftability of %arclays and &S%C throu$h 'roftability !atios.............(!eturn on "ssets )!*"+........................................................................................... (!eturn on e,uity )!*E+............................................................................................ -'roft .ar$in............................................................................................................ -"nalysin$ the Investment ratios of &S%C and %arclays............................................../'rice to %oo0 1alue !atio......................................................................................... /'rice to Earnin$s !atio............................................................................................ /2ividend 3ield........................................................................................................ 145ea0ness of !atio "nalysis...................................................................................... 16Conclusion 7 !ecommendation................................................................................186IntroductionIt is essential for each and every individual and organi$ation to make the efficient and effectiveuse of their money. Therefore it is important to watch out the inflows and outflows of moneymeticulously. These works can be done perfectly through proper financial management.Individuals and firms are continuously delving into this matter more broadly. %hile investing inthecompanies theinvestors usevarious types of financial tools tojudgetheperformance#profitability# li&uidity# marketability etc. of the prospective firms. Among these tools financialratios are the simplest and the most popular financial tools.Selected companies and the justifcations behind their inclusionTo prepare this particular report two giants of the banking industry namely arclays and HS!have been chosen. oth of these banks are listed in the FTS' ()) inde* that means they are thepart of the +nited ,ingdom-s ()) largest &ualifying companies. oth of these banks- operationhavesignificant contributionnot onlyin+, butalsothroughout the world.Arnold /0len#1)(23.arclays is a ritish bank which has operation in over 4) countries and territories. It has a largepool of customer which is around 56 million. arclays had a total asset of 7(2489):.)) millionas of 2( ;ecember 1)(5 which made it the world-s seventh largest bank. arclays hasconcentrated in multifarious activities like retail banking# corporate banking# investmentbanking# wealth and investment management etc. As of 19 may 1)(5 the market capitali$ation ofarclays is about728bn. Around(4))))employeeswork inthis mighty bakingcorporation.arclays is also listed on major stock e*change like ondon HS! Holdings plc has its operation in almost 6) countries. oth+nited,ingdomandHong,ongarethehomemarkets for HS!. It hasover :)millioncustomers to whom it serves services like credit cards# private banking# mortgage loan# consumerbanking# wealth management# investment banking# corporate banking etc. as of 19 may 1)(5 thetotal market capitali$ation of HS! was at about 7(19bn and around 1:8))) employees work in3this resourceful bank. All these facts and figures describe the importance of HS! in the worldeconomy. arclays and HS! at a glance as of =ear 1)(5 Subject ?atter arclays .in millions3 HS! .in millions31)(5 1)(2 1)(5 1)(2@evenue 7148:6.)) 716555.)) A85492.)) A86228.))Bperating Income 7(61(.)) 71655.)) A(:(56.)) A1)15).))