Ratio analysis is what financial analysis is all about. It is where you use your judgment to analyze financial ratios. Vertical analysis allows you to compare one year to another. From this you can notice growth, increased costs, decreased profit margins, etc. Horizontal analysis allows you to compare items within a base year. Usually you will compare these with other corporations in the same industry to determine benchmarks and best practices.

Liquidity ratios are used by lenders to determine a corporations ability to meet current obligations. There is no magic number of what is good. Industry averages are a standard but you dont want to lend to or invest in the average company. In fact, some corporations like Dell have rewritten the standards in their industry by receiving immediate payment from their customers while making their suppliers wait months for payments. Nevertheless, they have a sound financial condition despite low liquidity ratios. As always, you must use your judgment for interpretation and try to understand why the ratios are what they are.

Leverage ratios tell us the amount of debt and equity that are being used to fund the corporations expansion. Profitability ratios tell us how profitable the corporation is at various levels. Activity ratios tell us how efficient the corporation is utilizing its assets. Cash flow ratios help us better understand the income and balance sheets. Finally, many corporations are evaluated primarily by ratios such as the price to earnings ratio. You will now have a chance to review these ratios more in depth in this chapter as well as inside the book covers. This chapter is critically important for your understanding of financial analysis so please read it carefully.

In order to understand the concept of financial ratios, you will be looking at the railroad industry. Specifically, you will be examining the 10-k's of Union Pacific and Burlington Northern Santa Fe (BNSF) Railway.

Go to the SEC Web site Go to the Filings tab: Company Filing Search. In the Company name box enter Union Pacific and search. Select Union Pacific CO /DE. In the Filing Type box enter 10-K and search. Select the 10-K for 2005 filing date. Select: Document 1 file: d10k.htm "https://www.sec.gov/Archives/edgar/data/92259/000119312505037440/d10k.htm "

Go to the SEC Web site Go to the Filings tab: Company Filing Search. In the Company name box enter BNSF Railway Co. and search. In the Filing Type box enter 10-K and search. Select the 10-K for 2005 filing date. Select: d10k.htm. "https://www.sec.gov/Archives/edgar/data/15511/000119312505030548/d10k.htm"

Read both 10-K filings then compare, contrast and comment on their differences?

Give original comparative comments on one of the different aspects listed above and make a relevant substantive response to at least two other students comments?

Give your opinion as to the reason for the difference in results and identify which company would be better to work for and invest in?

To the anonymous poster: I cannot give you any more detail because I do not have any. The question wants your to compare and contrast the two companies paying attention to the Ratio analysis from the 10-k reports.

Read both 10-K filings then compare, contrast and comment on their differences? Give original comparative comments on one of the different aspects listed above and make a relevant substantive response to at least two other students comments? Give your opinion as to the reason for the difference in results and identify which company would be better to work for and invest in?

"https://www.sec.gov/Archives/edgar/data/92259/000119312505037440/d10k.htm"

"https://www.sec.gov/Archives/edgar/data/15511/000119312505030548/d10k.htm"

Company information too large cannot post. you have to go to outside web source.

Again, the "expert" that is commenting, Do you bother to read the question? You have to open a new web browser and seek information outside of this forum. I do not get it, I have posted 4 other question very similar to this one just different companies and 3 or the five questions have been answered spot on no problem. The other 1, just like this one, have been back and forth commenting and never get answered. Please, read the question before you tie up my question with your comments. You have to seek outside information when answering this question!