Review the assigned company’s financial statements from the past three years.
Calculate the financial ratios for the assigned company’s financial statements, and then interpret those results against company historical data as well as industry benchmarks:
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- Compare the financial ratios with each of the preceding three (3) years (e.g. 2014 with 2013; 2013 with 2012; and 2012 with 2011).
- Compare the calculated financial ratios against the industry benchmarks for the industry of your assigned company.
Write a 500 to 750 word summary of your analysis.
Show financial calculations where appropriate.
- Calculate key ratio equations
- Current ratio
- Quick ratio
- Cash ratio
- Inventory turnover
- Day’s sales in inventory
- Accounts receivable turnover
- Day’s sales outstanding
- Total asset turnover
- Fixed asset turnover
- Total debt ratio
- Debt-to-equity ratio
- Equity multiplier
- Times interest earned
- Cash coverage
- Gross profit margin
- Operating profit margin
- Net profit margin
- EBIT return on assets
- Return on assets (ROA)
- Return on equity (ROE)
- Market value indicator
- Earnings per share
- Price-earnings ratio
- DuPont equation
- ROE = Net Profit Margin x Total Asset Turnover x Equity Multiplier
- ROE = (Net Income / Net Sales) x (Net Sales / Total Assets) x (Total Assets / Total Equity)
- Interpret financial ratio results
- Interpret financial ratio results against historical company data.
- Interpret financial ratio results against industry benchmarks