Analytics Project $-$ Financial Accounting Report I $$ ACNT $1374$ Section $63700$ Summer II $2025$

Track company performance by determining individual financial ratios per period and tracking the change in their values over time is done to spot trends that may be developing in a company. For example, an increasing debt$-$to$-$asset ratio may indicate that a company is overburdened with debt and may eventually be facing default risk.

Make comparative judgments regarding company performance by comparing financial ratios with that of major competitors is done to identify whether a company is performing better or worse than the industry average. For example, comparing the return on assets between companies helps an analyst or investor to determine which company is making the most efficient use of its assets.

You will practice what users of financial ratios that include external and internal to the company defined as:

External users: Financial analysts, retail investors, creditors, competitors, tax authorities, regulatory authorities, and industry observers

Internal users: Management team, employees, and owners

This project will put you into the role of an external user looking at the following categories of analytical tools:

Liquidity Ratios that are financial ratios that measure a company$$s ability to repay both short$-$ and long$-$term obligations. Common liquidity ratios include the following:

The current ratio measures a company$$s ability to pay off short$-$term liabilities with current assets:

Current ratio $=$ Current assets $/$ Current liabilities

The acid$-$test ratio measures a company$$s ability to pay off short$-$term liabilities with quick assets:

Acid$-$test ratio $=$ Current assets $$ Inventories $/$ Current liabilities

The cash ratio measures a company$$s ability to pay off short$-$term liabilities with cash and cash equivalents:

Cash ratio $=$ Cash and Cash equivalents $/$ Current Liabilities

The operating cash flow ratio is a measure of the number of times a company can pay off current liabilities with the cash generated in a given period:

Operating cash flow ratio $=$ Operating cash flow $/$ Current liabilities

Leverage Financial Ratios that measure the amount of capital that comes from debt. In other words, leverage financial ratios are used to evaluate a company$$s debt levels. Common leverage ratios include the following:

The debt ratio measures the relative amount of a company$$s assets that are provided from debt:

Debt ratio $=$ Total liabilities $/$ Total assets

The debt$-$to$-$equity ratio calculates the weight of total debt and financial liabilities against shareholders$$ equity:

Debt to equity ratio $=$ Total liabilities $/$ Shareholder$$s equity

The interest coverage ratio shows how easily a company can pay its interest expenses:

Interest coverage ratio $=$ Operating income $/$ Interest expenses

The debt service coverage ratio r