In this assignment you will complete a Financial Ratio Analysis on the Gaming Industry, focusing on Electronic Arts Inc. (EA). You will compare this firm's financial ratios with its two main competitors: Activision Blizzard, Inc. and Take-Two Interactive Software, Inc. Download the file: Financial Ratio Analysis - Assignment One.xlsx Balance Steot Fxchsege rahe used is that of the Year End beofted dase tepoted case Buience 3hant Baiance Sheet Fxshande rahe uned is that of the Year End reported dohe In this file you will find the financial statements and the already calculated financial ratios for the two competitors, you only need to calculate the financial ratios for Electronic Arts, Inc. (that is your firm) and complete the financial ratio analysis In this file you will find the financial statements and the already calculated financial ratios for the two competitors, you only need to calculate the financial ratios for Electronic Arts, Inc. (that is your firm) and complete the financial ratio analysis in the "Financial Ratio Analysis" sheet in the excel file. In this file I also set up the format that you must follow to make the comparison. See the Financial Ratio Analysis sheet. Use the formulas where the ratios are already calculated for the two other firms as a guidance for your calculations on your own firm, Electronic Arts. There is a Video you should watch that includes detailed instructions for your analysis. It is available in the "Modules" tab. In this video. I use another firm as a sample but the procedure to calculate the ratios is the same. Video Titled: "Assignment 1 - Financial Ratio Analysis Example" - See Modules. Once you calculate EA's financial ratios and put them in the appropriate format, your final step is to interpret the financial ratios and provide an opinion on what your company is doing right and in which areas the firm needs some work. This is also explained in detail in the video above. You are going to use two approaches in your analysis. Cross sectional analysis: compare the financial ratios of your firm against the benchmarks from at least two competitors Time Series: use the financial ratios from the last five years. Overall, you must state your recommendation based on your analysis of the firm's overall financial situation and explain to me in your own words the reasoning behind your recommendation. Complete this analysis using both a cross-sectional and time-series analysis. The description and explanation for each financial ratio is shown in the textbook but to help you understand the ratios, you need to look at the numerator and the denominator and ask yourself what each one represents. For instance, the current ratio is current assets over current liabilities. You first notice that both are "Current". This is telling you that the ratio is referring to assets and liabilities that will be used or paid within a year. So basically, we are talking about the firm's operating activities. Let's say the current ratio is 0.80. Another way to state this is that for every dollar of current liabilities (denominator) the firm only has 80 cents in current assets (numerator). This does not seem good. Any number below 1 suggests that the firm does not have enough assets to pay off its short term debt if it becomes due now. There may be a liquidity problem here. How will they fox it or what steps will the firm need to take to be able to cover their operating expenses? You can compare this to the benchmark financial ratios, do they also have a low Current ratio, this may be common Preview As Reported Annual Income Statement Balance Sheet Exchange rate used is that of the Year End reported date Fila Drawiow Powered by Cleartit Take-Two Interactive Software, Inc. (NMS: TTWO) \begin{tabular}{lrrrrrrl} Gross Profit Margin & & & & & & Debt Ratio \\ EA & % & % & % & % & % & EA \\ ATVI & 72.1% & 67.7% & 66.4% & 64.4% & 63.8% & ATV \\ TTWO & % & % & % & % & % & TTWO \\ Operating Profit Margin & & % & % & % & % & % & Times Interest Earned (Coverage ratio) \\ EA & % & % & % & % & % & EA \\ ATVI & % & % & % & % & % & ATVI \\ TTWO & % & & & & & TTWO \\ Net Profit Margin & & % & % & % & % & % & Debt to Equity \\ EA & 27.2% & 23.2% & 24.2% & 3.9% & 14.6% & EA \\ ATVI & % & % & % & % & % & ATVI \\ TTWO & & & & & & TTWO \\ Roturn on Assets & % & % & % & % & % & Equity Multiplier \\ EA & % & % & % & % & % & AA \\ ATVI & % & % & % & % & % & TTWO \\ TTWO & % & % & & & & \\ \hline \end{tabular} Return on Equity EAATVITTWO%%%%%%%%%%%%%%% Here you will describe your dotalled analysis of each financial ratio and each comparison in this area. When comparing across firms (cross-sec Protitability Debtleverage Asset Activity Ratio In this assignment you will complete a Financial Ratio Analysis on the Gaming Industry, focusing on Electronic Arts Inc. (EA). You will compare this firm's financial ratios with its two main competitors: Activision Blizzard, Inc. and Take-Two Interactive Software, Inc. Download the file: Financial Ratio Analysis - Assignment One.xlsx Balance Steot Fxchsege rahe used is that of the Year End beofted dase tepoted case Buience 3hant Baiance Sheet Fxshande rahe uned is that of the Year End reported dohe In this file you will find the financial statements and the already calculated financial ratios for the two competitors, you only need to calculate the financial ratios for Electronic Arts, Inc. (that is your firm) and complete the financial ratio analysis In this file you will find the financial statements and the already calculated financial ratios for the two competitors, you only need to calculate the financial ratios for Electronic Arts, Inc. (that is your firm) and complete the financial ratio analysis in the "Financial Ratio Analysis" sheet in the excel file. In this file I also set up the format that you must follow to make the comparison. See the Financial Ratio Analysis sheet. Use the formulas where the ratios are already calculated for the two other firms as a guidance for your calculations on your own firm, Electronic Arts. There is a Video you should watch that includes detailed instructions for your analysis. It is available in the "Modules" tab. In this video. I use another firm as a sample but the procedure to calculate the ratios is the same. Video Titled: "Assignment 1 - Financial Ratio Analysis Example" - See Modules. Once you calculate EA's financial ratios and put them in the appropriate format, your final step is to interpret the financial ratios and provide an opinion on what your company is doing right and in which areas the firm needs some work. This is also explained in detail in the video above. You are going to use two approaches in your analysis. Cross sectional analysis: compare the financial ratios of your firm against the benchmarks from at least two competitors Time Series: use the financial ratios from the last five years. Overall, you must state your recommendation based on your analysis of the firm's overall financial situation and explain to me in your own words the reasoning behind your recommendation. Complete this analysis using both a cross-sectional and time-series analysis. The description and explanation for each financial ratio is shown in the textbook but to help you understand the ratios, you need to look at the numerator and the denominator and ask yourself what each one represents. For instance, the current ratio is current assets over current liabilities. You first notice that both are "Current". This is telling you that the ratio is referring to assets and liabilities that will be used or paid within a year. So basically, we are talking about the firm's operating activities. Let's say the current ratio is 0.80. Another way to state this is that for every dollar of current liabilities (denominator) the firm only has 80 cents in current assets (numerator). This does not seem good. Any number below 1 suggests that the firm does not have enough assets to pay off its short term debt if it becomes due now. There may be a liquidity problem here. How will they fox it or what steps will the firm need to take to be able to cover their operating expenses? You can compare this to the benchmark financial ratios, do they also have a low Current ratio, this may be common Preview As Reported Annual Income Statement Balance Sheet Exchange rate used is that of the Year End reported date Fila Drawiow Powered by Cleartit Take-Two Interactive Software, Inc. (NMS: TTWO) \begin{tabular}{lrrrrrrl} Gross Profit Margin & & & & & & Debt Ratio \\ EA & % & % & % & % & % & EA \\ ATVI & 72.1% & 67.7% & 66.4% & 64.4% & 63.8% & ATV \\ TTWO & % & % & % & % & % & TTWO \\ Operating Profit Margin & & % & % & % & % & % & Times Interest Earned (Coverage ratio) \\ EA & % & % & % & % & % & EA \\ ATVI & % & % & % & % & % & ATVI \\ TTWO & % & & & & & TTWO \\ Net Profit Margin & & % & % & % & % & % & Debt to Equity \\ EA & 27.2% & 23.2% & 24.2% & 3.9% & 14.6% & EA \\ ATVI & % & % & % & % & % & ATVI \\ TTWO & & & & & & TTWO \\ Roturn on Assets & % & % & % & % & % & Equity Multiplier \\ EA & % & % & % & % & % & AA \\ ATVI & % & % & % & % & % & TTWO \\ TTWO & % & % & & & & \\ \hline \end{tabular} Return on Equity EAATVITTWO%%%%%%%%%%%%%%% Here you will describe your dotalled analysis of each financial ratio and each comparison in this area. When comparing across firms (cross-sec Protitability Debtleverage Asset Activity Ratio