Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

answer soon as possible LAB #3 In groups of 5, select two publically traded companies on stock exchange (e.g.TSX, New York) These companies must be

image text in transcribed

image text in transcribed

answer soon as possible

LAB #3 In groups of 5, select two publically traded companies on stock exchange (e.g.TSX, New York) These companies must be in the same industry and you need to get approval before you can start the "task. Task: Using the 5 different type of financial formulas, compare the two companies and write a paragraph per formula explaining which one in your opinion is the best to invest money into? Marks: 10 Time: 3 hours Profitability Ratios Net profit margin- Not earnings Revenues Gross profit Gross profit margin- Revenues ROA - Profit margin ratio x total asset turnover Net earnings + Interest expense x (1 - Tax rate)] Sales revenue ROE - Net eamings - Preferred dividends Average common shareholders' equity Sales revenue Average total assets Short-Term Liquidity Ratios Current ratio Current assets Current liabilities Quick ratio - Cash + Accounts receivable + Marketable securities Current abilities Operating cash flow Operating cash flow to short-term debt Short-term debt and current maturities of long-term debt Activity Ratios Credit sales Accounts receivable turnover Average accounts receivable Inventory turnover Average inventory Cont of goods sold Credit purchases Accounts payable turnover - Average accounts payable Solvency Ratios Total liabilities Debt to equity - Shareholders' equity Total liabilities Debt to total assets Total assets Times interest earned - Not earnings + Taxes + Interest Interest Operating cash flow to total debt - Operating cash flow Total debt Equity Analysis Ratios Basic earnings per share Weighted average number of common shares outstanding Net earnings - Preferred dividends Price/earnings ratio - Stock market share price Earnings per share Profitability Ratios Net earnings Net profit margin Revenues Gross profit margin Gross profit Revenues ROA = Profit margin ratio x total asset turnover Net earnings + [Interest expense x (1 - Tax rate) Sales revenue Net earnings -- Preferred dividends ROE Average common shareholders' equity Sales revenue Average total assets Short-Term Liquidity Ratios Current assets Current ratio- Current liabilities Cash + Accounts receivable + Marketable securities Quick ratio = Current liabilities Operating cash flow Operating cash flow to short-term debt Short-term debt and current maturities of long-term debt Activity Ratios Accounts receivable turnover = Credit sales Average accounts receivable Cost of goods sold Inventory turnover Average inventory Accounts payable turnover - Credit purchases Average accounts payable Solvency Ratios Total liabilities Debt to equity = Shareholders' equity Debt to total assets = Total liabilities Total assets Times interest earned Net earnings + Taxes + Interest Interest Operating cash flow to total debt = Operating cash flow Total debt Equity Analysis Ratios Basic earnings per share Net earnings - Preferred dividends Weighted average number of common shares out: 4/4 Stock market share price Price/earnings ratio Earnings per share

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial & Managerial Accounting

Authors: Carl S. Warren

10th Edition

0324663811, 9780324663815

More Books

Students also viewed these Accounting questions

Question

Explain the concept of recreation for special populations.

Answered: 1 week ago

Question

Design a training session to maximize learning. page 309

Answered: 1 week ago