College of Business Department of Finance Financial Ratio Analysis Project Introduction to Managerial Accounting ACCT 202 Due Date: 5/4/2021 Group Members' Names: Submitted to: Dr. Mohammed AL Mallak Ms. Tajiyah Aljasser Following are data from the statements of two companies (Al Othaim Markets Co and Farm Superstores) selling similar products: Income Statement Data for 2020 Al Othaim Markets Co Farm Superstores Net Sales $63,200 $380,000 Cost of Goods Sold 41,200 28,462 Selling and administrative expense 13,201 72,920 Interest expense 625 1,862 Other Income (Expense) -89 -399 Income Tax Expense 1,289 6,982 Net Income $2,258 $13,985 Balance Sheets Data (End of 2020) Current Assets $19,862 $49,762 NonCurrent Assets 25,600 125,201 Total Assets $42,982 $162,500 Current Liabilities $10,890 $52,652 Long-term Debt 16,952 41,986 Total stockholders' Equity 14,950 72,101 Total Liabilities and stockholders' Equity $42,500 $171,250 Beginning-of-2020 Balances Total Assets $45,210 $165,200 Total stockholders' Equity 12,920 64,952 Current Liabilities 11,300 56,321 Total Liabilities 29,965 98,214 Other Data Average Net Accounts Receivable $7,820 $3,982 Average Inventory 7,020 34,012 Net Cash Provided by Operating Activities 5,689 27,842 Capital Expenditures 1,625 11,982 Dividends 503 4,125 Required: Compare the Solvency, Liquidity and Profitability position of the two companies by Calculating current ratio, Account Receivable Turnover, Average Collection Period (In Days) (365 days / Account Receivable Turnover), Inventory Turnover, Days in Inventory, Current Cash Debt Coverage (net cash provided by operating activities / average current liability), Profit Margin, Asset Turnover, Return on Assets, Return on Common Stockholder's Equity, Debt to Assets, Times Interest Earned, Cash Debt Coverage (net cash provided by operating activities / average total liability) and free Cash Flow (net cash provided by operating activities - Capital expenditures - cash dividends). Then state which company you think is better in short-term and why (Interpretation) and under the assumption that each company's stock can be purchased at book value, state which company's stock you think is better to invest and why (Interpretation). Instructions: 1- Small Introduction about two Companies (Half to One Page) (1 Mark) - Need Sources 2- Body - Ratio Analysis (8 Marks) 2.1 Include formulae 2.2 Calculate Ratios in Details 2.3 Fill the table with ratios (Answers of Ratios in Order) and Interpretation Ratio Analysis Formula Interpretation Al Othaim Markets Co Farm Superstores 3- Compare the Solvency, Liquidity and Profitability for the two companies (Half Page) (5 Marks) 4- Small Conclusion (Half Page) (1 Mark) Sources for two companies (Al Othaim Markets Co and Farm Superstores): Al Othaim Market's Sources https://www.othaimmarkets.com/othaim?___store=en&___from_store=en http://www.albilad-capital.com/Research_EnglishReport/OthaimQ417-EN.pdf https://english.mubasher.info/markets/TDWL/stocks/4001/profile Note: You can use other sources from online websites Farm Superstores's Sources: https://www.farm.com.sa//en/about-farm/corporate-profile/ Note: You can use other sources from online websites