document of 500-800 words with attached Excel spreadsheet showing calculations
Calculate and analyze financial ratios, make recommendations for
improvement in financial performance.
Analyze financial statements; develop cash flow analysis, and
pro forma statements.
Use effective communication, team and problem-solving skills to
collaborate on a project.
Locate a publicly traded U.S. company of your choice. Then,
calculate the following ratios for the company for 2012 and 2013:
- Liquidity Ratios
- Current ratio [current
assets / current liabilities]
- Quick ratio [(current
assets – inventory) / current liabilities]
- Asset Turnover Ratios
- Collection period
[accounts receivable / average daily sales]
- Inventory turnover [cost
of goods sold / ending inventory]
- Fixed asset turnover
[sales / net fixed assets]
- Financial Leverage Ratios
- Debt-to-asset ratio
[total liabilities / total assets]
- Debt-to-equity ratio
[total liabilities / total stockholders’ equity]
(TIE) ratio [EBIT / interest]
- Profitability Ratios
- Net profit margin [net
income / sales]
- Return on assets (ROA)
[net income / total assets]
- Return on equity (ROE)
[net income / total stockholders’ equity]
- Market-Based Ratios
- Price-to-earnings (P/E)
ratio [stock price / earnings per share]
- Price-to-book (P/B) ratio
[market value of common stock / total stockholders’ equity]
You are now ready to interpret the ratios that you have calculated.
If a ratio increased from 2012 to 2013, why do you think that it increased? Is
it a good or bad sign that the ratio increased? Please explain.
If a ratio decreased from 2012 to 2013, why do you think that it
decreased? Is it a good or bad sign that the ratio decreased? Please explain.
If a ratio was unchanged from 2012 to 2013, why do you think
that it was unchanged? Is it a good or bad sign that the ratio was unchanged?