Description
Purpose of Assignment
The activity requires students to perform research and analysis on competing companies and the potential implications of international standards. This real-world analysis is key to understanding how a company's profitability, liquidity, and solvency can be useful for all users. Students also learn to analyze financial statements and use managerial tools to make decisions from an investor's and creditor's standpoint.
Assignment Steps
Select two competing companies, that are US publicly traded, and locate annual reports for these two companies by going DIRECTLY TO THE COMPANY WEBSITES TO DOWNLOAD THE ANNUAL REPORT OR 10-K. DO NOT USE SUMMARY SITES.
Research the two companies on the Internet and download the Annual Reports with the Income Statement, Statement of Shareholders' Equity, Balance Sheet, and Statement of Cash Flows.
IN EXCEL:
- Make a 5-year trend analysis for each company:
- Net sales.
- Net income.
- Compute for the two most recent years the:
- Debt to assets ratio.
- Compute for two most recent years the:
- Profit margin.
- Asset turnover.
- Return on assets.
Develop a maximum 500-word APA Formatted Paper and include the following:
- Evaluate the financial opportunity presented by the companies. If you were a creditor, which company would you be more likely to lend money to? Defend your decision.
- Which company would you recommend as an investment? Discuss the items that were considered in your decision.
- At which company would you prefer a management position and why?
Show your work in Excel®.
Complete calculations/
Include the four financial statements along with your assignment or a working link, clearly indicated.
Format your assignment consistent with APA guidelines USING THE APA TEMPLATE PAPER I PROVIDED.
Explanation & Answer
use these two documents please. All the best
Running head: RATIO ANALYSIS
1
RATIO ANALYSIS
Student’s Name
Institution Affiliation
Date
RATIO ANALYSIS
2
RATIO ANALYSIS
Amazon and Best Buy are two competing electronic stores that are publicly traded in the
United States. These companies present crediting and investment financial opportunities. Investors
can lend the companies money and invest in the credit market. One could also buy stocks, thus
investing in the equity of the company.
If I were a creditor, I would be more likely to lend money to Best Buy because of the
following reasons. First, it is because it has a lower debt to asset ratio as compared to Amazon.
Debt to asset ratio shows how much debt the company already has (Peterson, & Fabozzi, 2014).
A lower debt to asset ratio is an indication that Best Buy has a stronger financial structure than
Amazon, which has a higher financial risk. Thus, it is less risky to lend the company money...