Obtain the annual reports of ten companies, two from each of five different industries. Most companies’ financial statements can be downloaded from their websites.

Requirements

1. Compute each company’s gross profit percentage and rate of inventory turnover for the most recent two years.

2. For the industries of the companies you are analyzing, obtain the industry averages for gross profit percentage and inventory turnover by searching online for: (1) industry averages for gross profit percentage and (2) industry averages for inventory turnover. Be sure to cite your source for industry averages. Alternatively, you may be able to find the averages from one of the following sources in your school’s library: Robert Morris Associates, Annual Statement Studies; Dun and Bradstreet, Industry Norms and Key Business Ratios; or Leo Troy, Almanac of Business and Industrial Financial Ratios.

3. How well does each of your companies compare to the other company in its industry? How well do your companies compare to the average for their industry? What insight about your companies can you glean from these ratios?

4. Write a report summarizing your findings and state whether or not your group would invest in each of the companies it analyzed.