Question
Hello, I am having a hard time with this assignment, my professor is asking to pick three rations but I am not sure which ones
Hello, I am having a hard time with this assignment, my professor is asking to pick three rations but I am not sure which ones to pick. I have the column $25MM for Lowes pulled up just need help figuring out the rest.
On the "FRB Sales" page, the first thing you must do is to locate the column of data that you will use in your analysis. Data is categorized by the amount of annual company sales; data for most large corporations is under the column labeled $25MM. (Note:"M" stands for thousands of dollars, "MM" stands for millions of dollars.)
For most ratios, three numbers are listed, breaking the results into quartiles. Presenting the data in this form offers the user a broader perspective than a single average would provide. Using quartile data offers the user a broader perspective when interpreting the results. For example, if a company's ratio is a bit below the median, you might be tempted to conclude that the company is not doing well. However, you should also note that the company's ratio falls between the top and bottom figures, putting the company among 50% of all companies reporting.
Use the following breakdown when evaluating the company's ratio against the industry average:
- The middle number of the three ratios is the median, not the average.
- 50% of the companies reporting have a ratio between the top and bottom number.
- 25% of the companies have a ratio that would be above the top number.
- 25% of the companies have a ratio that would be between the top and middle number.
- 25% of the companies have a ratio that would be between the middle and bottom number.
- 25% of the companies have a ratio that would be below the bottom number.
To better understand and interpret the data, click on the About eStatement Studies tab. Select
Financial Ratio Benchmarks Data and review the links for ratios that follow.
Interpreting Financial Ratios
I am most interested in you keying in on ratios that have significant variation from industry norms, are significantly different than their main competitor, or are trending over time within the company.
Investopedia's website offers additional explanations for how specific ratios are used. Use the search box on the site to find more information.
Keep in mind that ratio analysis involves the evaluation of imperfect data. Nonetheless, financial analysis must use the data, however flawed, to make informed decisions
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