ACTIVITY GUIDELINES$($Analyzing Financial Health Through Ratio Analysis$)$

I Company Selection:

$1.$ Choose two publicly traded companies from the same industry sector $($e$.$g$.,$ technology, retail, automotive$).$

$2.$ Ensure both companies have at least $2$ years of historical financial statements readily available online $($e$.$g$.,$ company website, financial databases$).$

II Data Collection:

$1.$ Gather the balance sheets and Income Statements of both companies for the past $2$ years.

III Balance Sheet$/$Income Statement Comparison:

Compare the following key components of the balance sheet across the $2$ years period:Total Assets

Total Liabilities

Shareholders$$ equity

Working Capital$($Current Assets$-$Current Liabilities

Long Term Debts

In terms of calculating the Liquidity Ratio, Activity Ratio, Debt Ratios, Profitability Ratio,

IV Analysis and Interpretation:

$1.$ Calculate the necessary Ratios.

$2.$ Cross$-$Company Comparison: Compare the ratios of each company to each other within each year. Identify which company demonstrates stronger performance in each financial dimension $($liquidity$,$ solvency, activity, profitability$).$

$3.$ Strategic Implications: Analyze how the financial health of each company, as revealed by the ratio analysis, might impact their current and future strategies. Consider aspects like:

$1.$ Growth potential and investment opportunities.

$2.$ Debt management and financial risk profile.

$3.$ Competitive advantage and market positioning.

$4.$ Working capital management and cash inflows and outflows.

$5.$ Efficiency and Operations

$4.$ Research and discuss any recent news articles or industry reports that might explain the trends observed in the financial ratios.$($ Let's say you observed a decline in the current ratio for several companies you're analyzing. You could use the recent news or industry reports to explain the recent challenges in the partcular industry, such as supply chain disruptions or rising inventory levels, that might explain this trend.$)$

Project Deliverables:

$1.$ Provide a clear introduction outlining the project objectives and company selection rationale.$(10$ Marks$)$

$2.$ A well$-$organized report summarizing your findings.$(20$ Marks$)$

$3.$ Include a table for each company with the calculated ratios for all two years.$(30$ Marks$)$

$4.$ Discuss the key insights you gained from the ratio analysis regarding each company's financial health and potential future performance.$(20$ Marks$)$

$5.$ Briefly mention any limitations of ratio analysis and the importance of considering other financial data points for a more comprehensive evaluation.$(5$ Marks$)$

$6.$ Visualizations: Consider using charts and graphs to effectively represent the trends observed in key ratios for each company, enhancing the clarity of your analysis.$(15$ Marks$)$