Select $$two $$different $$corporations $$

$($

from $$the $$same $$industry

$)$

$$publicly $$traded $$in $$the $$US $$Stock $$Exchange $$Markets$.$

$($

NYSE

$,$

$$NASDAQ

$)$

Make $$sure $$the $$companies $$you $$select $$are $$traded $$in $$same $$currency $$

$($

USD

$,$

$$Euro$,$GBP

$)$

Please $$get $$the $$approval $$for $$the $$names $$of $$the $$firm $$before $$you $$start $$your $$work$.$

The $$analysis $$of $$same $$company $$by $$different $$students $$will $$not $$be $$graded

Download $$the $$necessary $$financial $$statements $$for $$the $$companies $$for $$

$2021$

$$and $$

$2020$

For $$data $$collection $$you $$can $$use: $$

finance.yahoo.com $$or $$

finance.google.com

Part $$

$1$

: $$Apply $$the $$financial $$analysis $$for $$the $$last $$two $$years $$using $$ratios $$covered $$in $$Chapter $$

$3$

$.$

Use $$excel $$formulas $$for $$calculation $$of $$the $$ratios $$on $$a $$separate $$sheet $$

$($

manual $$calculations $$will $$not $$be $$graded$!$

$)$

You $$are $$not $$responsible $$for $$Part $$

$5($

V

$.$

$$Market $$Value

$)$

$$ratios

Some $$companies $$may $$not $$have $$all $$the $$data $$due $$to $$their $$variations $$in $$industries$.$

If $$you $$face $$missing $$data $$just $$skip $$that $$ratio $$

$($

mention $$as $$

$"$

no $$available $$data$"$ TABLE $3\mathrm{.}5$

Common financial ratios

I. Short$-$term solvency, or llquidity, ratios

Current ratio $=\frac{\text{C}\text{u}\text{r}\text{r}\text{e}\text{n}\text{t}\text{a}\text{s}\text{s}\text{e}\text{t}\text{s}}{\text{C}\text{u}\text{r}\text{r}\text{e}\text{n}\text{t}\text{I}\text{l}\text{a}\text{b}\text{i}\text{l}\text{i}\text{t}\text{l}\text{e}\text{s}}$

Quick ratio $=\frac{\text{C}\text{u}\text{r}\text{r}\text{e}\text{n}\text{t}\text{a}\text{s}\text{s}\text{e}\text{t}\text{s}-\text{I}\text{n}\text{v}\text{e}\text{n}\text{t}\text{o}\text{r}\text{y}}{\text{C}\text{u}\text{r}\text{r}\text{e}\text{n}\text{t}\text{I}\text{l}\text{a}\text{b}\text{i}\text{l}\text{i}\text{t}\text{l}\text{e}\text{s}}$

Cash ratio $=\frac{\text{C}\text{a}\text{s}\text{h}}{\text{C}\text{u}\text{r}\text{r}\text{e}\text{n}\text{t}\text{I}\text{l}\text{a}\text{b}\text{i}\text{l}\text{i}\text{t}\text{l}\text{e}\text{s}}$

II$.$ Long$-$term solvency, or financlal leverage, ratios Total debt ratio $=\frac{\text{T}\text{o}\text{t}\text{a}\text{l}\text{a}\text{s}\text{s}\text{e}\text{t}\text{s}-\text{T}\text{o}\text{t}\text{a}\text{l}\text{e}\text{q}\text{u}\text{i}\text{t}\text{y}}{\text{T}\text{o}\text{t}\text{a}\text{l}\text{a}\text{s}\text{s}\text{e}\text{t}\text{s}}$ Debt$-$equity ratio $=$ Total debt$/$Total equity Equity multiplier $=$ Total assests$/$Total equity Times interest earned ratio $=\frac{\text{E}\text{B}\text{I}\text{T}}{\text{I}\text{n}\text{t}\text{e}\text{r}\text{e}\text{s}\text{t}}$ Cash coverage ratio $=\frac{\text{E}\text{B}\text{I}\text{T}+\text{D}\text{e}\text{p}\text{r}\text{e}\text{c}\text{l}\text{a}\text{t}\text{i}\text{o}\text{n}}{\text{I}\text{n}\text{t}\text{e}\text{r}\text{e}\text{s}\text{t}}$

III. Asset utlilization, or turnover, ratios

Inventory turnover $=\frac{\text{C}\text{o}\text{s}\text{t}of\text{g}\text{o}\text{o}\text{d}\text{s}\text{s}\text{o}\text{l}\text{d}}{\text{I}\text{n}\text{v}\text{e}\text{n}\text{t}\text{o}\text{r}\text{y}}$

Days' sales $In$ inventory $=\frac{365\text{d}\text{a}\text{y}\text{s}}{\text{I}\text{n}\text{v}\text{e}\text{n}\text{t}\text{o}\text{r}\text{y}\text{t}\text{u}\text{r}\text{n}\text{o}\text{v}\text{e}\text{r}}$

Recelvables turnover $=\frac{\text{S}\text{a}\text{l}\text{e}\text{s}}{\text{A}\text{c}\text{c}\text{o}\text{u}\text{n}\text{t}\text{s}\text{r}\text{e}\text{c}\text{e}\text{l}\text{v}\text{a}\text{b}\text{l}\text{e}}$

Payables turnover $=\frac{\text{C}\text{o}\text{s}\text{t}of\text{g}\text{o}\text{o}\text{d}\text{s}\text{s}\text{o}\text{l}\text{d}}{\text{A}\text{c}\text{c}\text{o}\text{u}\text{n}\text{t}\text{s}\text{p}\text{a}\text{y}\text{a}\text{b}\text{l}\text{e}}$

Days' sales $in$ recelvables $=\frac{365\text{d}\text{a}\text{y}\text{s}}{\text{R}\text{e}\text{c}\text{e}\text{l}\text{v}\text{a}\text{b}\text{l}\text{e}\text{s}\text{t}\text{u}\text{r}\text{n}\text{o}\text{v}\text{e}\text{r}}$

Days' costs $in$ payables $=\frac{365\text{d}\text{a}\text{y}\text{s}}{\text{P}\text{a}\text{y}\text{a}\text{b}\text{l}\text{e}\text{s}\text{t}\text{u}\text{r}\text{n}\text{o}\text{v}\text{e}\text{r}}$

Total asset turnover $=\frac{\text{S}\text{a}\text{l}\text{e}\text{s}}{\text{T}\text{o}\text{t}\text{a}\text{l}\text{a}\text{s}\text{s}\text{e}\text{t}\text{s}}$

Capital intensity $=\frac{\text{T}\text{o}\text{t}\text{a}\text{l}\text{a}\text{s}\text{s}\text{e}\text{t}\text{s}}{\text{S}\text{a}\text{l}\text{e}\text{s}}$

IV$.$ Profitability ratios

Profit margin $=\frac{\text{N}\text{e}\text{t}\text{I}\text{n}\text{c}\text{o}\text{m}\text{e}}{\text{S}\text{a}\text{l}\text{e}\text{s}}$

Return $on$ assets $(ROA)=\frac{\text{N}\text{e}\text{t}\text{I}\text{n}\text{c}\text{o}\text{m}\text{e}}{\text{T}\text{o}\text{t}\text{a}\text{l}\text{a}\text{s}\text{s}\text{e}\text{t}\text{s}}$

Return $on$ equity $(ROE)=\frac{\text{N}\text{e}\text{t}\text{I}\text{n}\text{c}\text{o}\text{m}\text{e}}{\text{T}\text{o}\text{t}\text{a}\text{l}\text{e}\text{q}\text{u}\text{i}\text{t}\text{y}}$

ROE $=\frac{\text{N}\text{e}\text{t}\text{i}\text{n}\text{c}\text{o}\text{m}\text{e}}{\text{S}\text{a}\text{l}\text{e}\text{s}}\frac{\text{S}\text{a}\text{l}\text{e}\text{s}}{\text{A}\text{s}\text{s}\text{e}\text{t}\text{s}}\frac{\text{A}\text{s}\text{s}\text{e}\text{t}\text{s}}{\text{E}\text{q}\text{u}\text{i}\text{t}\text{y}}$

V$.$ Market value ratios

Price earnings ratio $=\frac{\text{P}\text{r}\text{i}\text{c}\text{e}\text{p}\text{e}\text{r}\text{s}\text{h}\text{a}\text{r}\text{e}}{\text{E}\text{a}\text{r}\text{n}\text{i}\text{n}\text{g}\text{s}\text{p}\text{e}\text{r}\text{s}\text{h}\text{a}\text{r}\text{e}}$

Price$-$sales ratio $=\frac{\text{P}\text{r}\text{i}\text{c}\text{e}\text{p}\text{e}\text{r}\text{s}\text{h}\text{a}\text{r}\text{e}}{\text{S}\text{a}\text{l}\text{e}\text{s}\text{p}\text{e}\text{r}\text{s}\text{h}\text{a}\text{r}\text{e}}$

Market$-$to$-$book ratio $=\frac{\text{M}\text{a}\text{r}\text{k}\text{e}\text{t}\text{v}\text{a}\text{l}\text{u}\text{e}\text{p}\text{e}\text{r}\text{s}\text{h}\text{a}\text{r}\text{e}}{\text{B}\text{o}\text{o}\text{k}\text{v}\text{a}\text{l}\text{u}\text{e}\text{p}\text{e}\text{r}\text{s}\text{h}\text{a}\text{r}\text{e}}$

EBITDA ratio $=\frac{\text{E}\text{n}\text{t}\text{e}\text{r}\text{p}\text{r}\text{i}\text{s}\text{e}\text{v}\text{a}\text{l}\text{u}\text{e}}{\text{E}\text{B}\text{I}\text{T}\text{D}\text{A}}$

Part $2$: Analyze the "profitability ratios" of the companies you selected. $($only profitability ratios!$)$

Prepare a report on the selected companies:

Comment on profitability ratios for the firms separately $($one by one$)$

Compare year $2021$ vs $2020$ for each firm.

What was the position of the company by the end of $2021$ and what happened in $2020.$

What could be the probable causes of the changes

Compare the two companies' profitability ratios for the year of $2021.($only $2021)$

How you can interpret the differences of profitability ratios of these two companies.

Please upload your ratio analysis in MS Excel $(.$xlsx$)$ and interpretations of ratios in Portable Document Format $.$pdf format.

Submit both files for your assignment to this section $($excel calculations and interpretation$)$

please do not print or send as e$-$mail