Choose two companies that are from the same industry. One company is considered your company and the other is considered a competitor.

My Two Companies: Honda Motor Company and Ford Motor Company

Find & List the 2017 & 2018 Balance Sheet and Income Statement at:

https://finance.yahoo.com/quote/HMC/financials?p=HMC

https://finance.yahoo.com/quote/F/balance-sheet?p=F

1. (Common-size Balance Sheet & Common-size Income Statement Analysis)

1) With 2017 & 2018 balance sheet & Income statement for each company, create common -size balance sheets and common-size income statements.

2) Using 2018 common-size balance sheet and income statement, compare your company with the benchmark and describe how your company is similar to or different from the benchmark.

3) Using 2017 & 2018 common-size balance sheet and income statement of each company, do the time trend analysis and describe how each company changes over time.

2. (Financial Ratio Analysis) Using 2017 & 2018 Balance sheet & Income statement for each company, compute the following financial ratios for each company:

1) Current ratio

CR = CA/CL

2) Quick ratio

= (CA - Inventory) / CL

3) Debt-to-equity ratio

= TD / TE

4) Times interest earned ratio (Interest coverage ratio)

= EBIT / Interest

5) Inventory Turnover

= COGS / Inventory

6) Receivable turnover

= Sales / Accts. Rec.

7) Total asset turnover

= Sales / Total Assets

8) Profit margin

= Net Income / Sales

9) Return on Asset (ROA)

= Net Income / Total Assets

10) Return on Equity (ROE)

= Net Income / Total Equity

11) Price-earnings ratio

= Price Per Share / Earnings Per Share

12) Market-to-book ratio

= Market Value Per Share / Book Value Per Share

3. (Financial Ratio Analysis) Select the benchmark for peer group analysis. You'll use two kinds of benchmarks in this assignment. One is your competitor's ratios and the other is industry averages (you can find industry averages from finance.yahoo.com or www.reuters.com or investing.money.msn.com). Make sure that you cite the source of industry averages.

1) Using the 2018 ratios from Question 2, compare your company's ratios to both competitor's and industry averages. Then describe how good or bad ratios of your company are considered.

2) Using 2017 & 2018 ratios for your company, compare your company's 2017 ratios with 2018 ratios and describe the similarities and differences.

4. (DuPont Identity) DuPont Identity Equation: ROE = PM * TAT * EM

1) Using the DuPont Identity equation, compare your company's 2018 ROE with competitor's 2018 ROE. Find out what makes difference in ROEs between your company and competitor.

2) Using the DuPont Identity equation, compare your company's 2017 ROE with 2018 ROE. Find out what makes difference in ROE between two periods if there is any difference.