Hey Guys,

Can someone please help me with my practice exercise in financial accounting. Im really struggling with it. I just wanna know how its done, so I can go over the answers and study from it for my up coming exam next. I have worked on the Ratio part Nr.1 but im not sure if I got it right.

I would be glad if someone can help me as soon as possible.

Thank you very much

If doing assignment as a group, BE SURE to do the ratios and analysis as a group together. If anyone in the group did not contribute, you may report it to me in strict confidence. Note: Use the consolidated financial statements (income, balance sheet, cash flow) and ignore \"Statement of Comprehensive Earnings.\" 1. You work for a small Canadian auto and truck parts supplier. Your boss has asked you or your team to figure out a number of financial ratios (see table) for two larger Canadian companies in the auto parts manufacturing industry - focussing on profitability, operating efficiency, financial strength, returns on assets and returns to shareholders. Magna Intl. 2014 Year-end Linamar 2014 Yearend Gross Margin 13.6% 15.9% Net Margin 4.19% 7.7% ROTA 14.15% 12.15% ROE 21.67% 19.18% US Industry Average December 2014 18.25% 5.03% 5.02% 15.43% Quick Ratio 0.95 1.13 Current Ratio 1.31 1.72 Total L/E 1.09 0.76 Long-term debt/equity 0.09 0.26 Times Int. Earned 88.55X 9.83X Receivable Turnover 6.5X 6.6X Inventory Turnover 11.5X 7.7X *Interest Expense may be called 'Finance Expenses. Be sure to use EBIT.' Also called Working Capital Ratio. 0.21 1.33 2.08 0.68 11.2X 6.4X 13.8X 2. You are to prepare a brief written analysis, comparing the ratios for Magna International Inc. to Linamar Corporation - and summarize which company seems to be superior to the other (better margins, less debt, better working capital etc.) and in which areas. You can find the annual financial statements online (links available on page 2). 3. Include a brief comparison of each company to the industry averages (already included in the table). Is either company doing significantly better or worse than the industry based on any financial ratios? If so, which in particular? 4. Magna's stock price on December 31st, 2014 closed at $108.69. Linamar's stock price closed at $70.95 the same day. Earnings per share (net earnings for each company by the number of shares outstanding) is provided on a basic and diluted basis in the Income Statement. Calculate the P/E ratio (price of stock given above divided by the 2014 diluted eps) for each company. Which company has the higher valuation? Can you very briefly explain why? If the industry average P/E multiple for US companies was 18.38 times earnings, how do these two Canadian companies compare to the industry average valuation. Find the 2014 annual financial statements for Linamar at: Go to www.linamar.com/investors and click on Financial Reports & Public Filings. Select 2014 Financial Statements - you only need pages 4 to 8. Find the 2014 annual financial statements for Magna International at: http://www.magna.com/investors/financial-reports-public-filings Select the Annual Report for 2014. It is too large to print so I suggest your print only pages 51 to 54 (which will give you the financial statements on pages 36 to 39 in the report)