Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Memo 1 Guidelines: Analysis of Financial Statements Chapter 3 ( Ross Textbook ) 1 . You are to prepare an analysis of where your company
Memo Guidelines: Analysis of Financial Statements
Chapter Ross Textbook
You are to prepare an analysis of where your company is now and what the future outlook is Discuss potential strengths and weaknesses, and what actions should be taken to maintain or regain its financial health. You should compare your firms performance to its industry, and its biggest competitor. You may use whatever source of data you want for the calculations, but they should all be from the same source so that the results are comparable. Indicate the source of your data at the end of your memo.
First, calculate the liquidity ratios current ratio and quick ratio for each firm for the last three years. Put your results in a table format in your appendices and discuss in your memo.
Second, calculate asset management ratios inventory turnover ratio, DSO, fixed asset turnover ratio, and total assets turnover ratio for each firm for the last three years. Put your results in a table format in your appendices and discuss in your memo.
Third, calculate debt management ratios debt ratio, debt to equity ratio, market debt ratio, times interest earned ratio, and EBITDA for each firm for the last three years. Put your results in a table format in your appendices and discuss in your memo.
Fourth, calculate profitability ratios net profit margin, operating profit margin, gross profit margin, basic earnings power, return on assets, and return on common equity for each firm for the last three years. Put your results in a table format in your appendices and discuss in your memo.
Fifth, calculate market value ratios priceearnings pricecash flow, and marketbook for each firm for the last three years. Put your results in a table format in your appendices and discuss in your memo.
Sixth, use the extended Du Pont equation to provide a summary and overview of your firms financial condition as projected for What are your firms major strengths and weaknesses?
Seventh, discuss some qualitative factors that you should consider when evaluating your firms future performance. Relate these factors to your firm.
Include all sources used for the analysis the end of your report.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started