Instructions: This assignment is due in this module. The first part of this a spreadsheet of all the ratios fro chapter $14$ for microsoft. You will calculate the last $3$ years for your company and the previous $3$ years for apple INC. $,$ for each ratio.

For The second part of this assignment is to write a research paper based on your ratio analysis. your paper should be a minumun of $1,000$ words and should include an analysis of ratios, trends and comparisons to Apple and the industry.

Finanancial ratio analysis for microsoft. Find financial ratios for Microsft for the last $3$ years and its major competitor Apple Inc. for the last $3$ years

o Present the ratios as a table$($s$)$ in your project.

o Write $1000$ of analysis of the ratio results that you found. Compare the ratio results against the industry or main competitor. In your analysis you should answer the following questions:

This is how someone answered this exact question for Microsoft. This is an example of what I need.

EXAMPLE:

Ratio analysis is the powerful tool of financial statements analysis. A ratio is define as $$the indicated quotient of two mathematical expressions$$ and as $$the relationship between two or more things$$ ie: Ratio is the numerical relationship between two inter$-$related numbers or items. The absolute figures reported in the financial statement do not provide meaningful understanding of the performance and financial position of the firm. Ratio helps to summaries large quantities of financial data and to make qualitative judgment of the firm$$s financial performance.

Significance Of Ratio Analysis

Ratio analysis is of great help of commercial bankers, trade creditors and institutional lenders. They judge the ability of borrowing enterprises by observing various ratios like the current ratio, acid test ratio, and turnover of receivables, inventory turnover, and coverage of interest by the level of earnings.

Ratio analysis also helps long term creditors in knowing the ability of a borrowing enterprises to pay interest principal in case earnings decline they find valuable the ratios of total debt to equity and total debt to total assets. Investors in shares judge the performance of the company by observing the per share into ratios like earnings per share, book value per share, market price per share, dividends per share etc.

Ratio analysis helps to appraise the firms in the term of there profitability and efficiency of performance, either individually or in relation to other firms in same industry.

Similarly, the ratio analysis may be able to locate the point out the various areas which need the management attention in order to improve the situation. E$.$g$.$ Current ratio which shows a constant decline trend may be indicate the need for further introduction of long term finance in order to increase the liquidity position.

As the ratio analysis is concerned with all the aspect of the firm$$s financial analysis liquidity, solvency, activity, profitability and overall performance, it enables the interested persons to know the financial and operational characteristics of an organization and take suitable decisions.

It facilitate inter firm comparison. It reveals how well it serves. As a useful aid in financial forecasting future trends can be known in advance based on ratios relating to part sales, profits and financial.

It facilitates comparative study of the performance and, progress of a firm over a period of years. Such a study will reveal the directions in the firm is moving.

It serves as a useful tool for cost control. It reveals now efficiently a firm is managed and how effectively its assets are utilized.

It serves as a means of communication to report on the strength and financial standing of a firm to the management and external parties.

It facilitates trend analysis. It reveals the progress or decline of a firm over the years.

It serves as diagnostic too to assess the financial health of a firm. It throws light on its liquidity, solvency, profitability and capital gearing position.

$1.$Liquidity Ratios $($Short$-$Term Solvency Ratio$)$

The ability of a firm to meet its current liability is referred to as liquidity.Thus liquidity ratios are also known as short$-$term solvency ratios.These ratios indicate the ability of the firm to meet its current obligations maturing within a period of one year out of its current resources.These ratios help in measuring the short term solvency position of the firm.Liquidity ratios include :

Current Ratio$/$Working Capital Ratio $$ Current Ratio is computed to measure the short term financial position of the firm.It is a relationship between current assets to current liabilities. $.$ Current ratio indicates the availability of current assets in rupees for every rupee of current.

Current Ratio $=$ Current assets $/$ Current liabilities

Current assets include cash and those assets which can be converted in to cash within a year,such marketable securities$,$ debtors and inventories. ie Current Assets$=$ Cash in hand & bank $+$ B$/$R $+$ Short$-$term investments $($ Marketable Securities$)+$ Debtors less provision $+$ stock $($Raw materials $+$ Work$-$in$-$progress $+$ finished goods $)+$ Prepaid expenses $+$ Accrued Income.

All obligations within a year are include in current liabilities