This assignment requires a financial analysis of an organization. All pertinent assignment details are attached to this file.

For this assignment, you will be required to summarize five types of ratios (i.e. profitability, liquidity, and others). You will conduct research on the organization United Continental Holdings Inc for this assignment. You Must calculate a minimum of 5 financial ratios that assess how well the organizations strategy is working when compared to Delta and Southwest airlines. To receive credit for this assignment, you must clearly show your work for these calculations and explain if the organization has a winning strategy in place. All data utilized for this assignment must be relevant within the past year. No sources utilized can be over 1-year old. You must utilize a minimum of 2 sources for this assignment. Please refer to the ratio table attachment for further details. Ratio analysis includes both a cross-sectional analysis and a time-series analysis. The cross-sectional analysis compares differen ratios at the same point in time. In your assignment you are expected to choose at least one ratio from each category below an selected firm's ratio to at least two other firms in the same industry. Time series analysis evaluates the firm's financial perform see if the trend is increasing, decreasing or staying the same. In this case analysis you are expected to include a three-year tim the firm and for the same competitors used in the cross-sectional analysis. Use the most current data and cite your source and Key Financial Ratios: How to Calculate Them and What They Mean Ratio How Calculated Profitability Ratios enable analysts to evaluate the firm's profits with respect to sales, assets, or owner's investments. 1. Gross profit margin (Revenues - Cost of goods sold) / Revenues - Operating expenses) / Revenues 2. Operating profit margin (or return on sales) (Revenues or Operating income / Revenues 3. Net profit margin (or net return on sales) Profits after taxes / Revenues 4 . Total return on assets (ROA) (Profits after taxes + Interest) / Total assets 5. Return on stockholder'sequity (ROE) Profits after taxes / Total stockholders' equity 6. Earnings per share (EPS) Profits after taxes / Number of shares of common stock outstanding Liquidity Ratios indicate whether a firm can cover its short term liabilities. 1 . Current ratio Current assets / Current liabilites 2. Quick ratio (acid test) (Current assets - inventory) / Current liabilities Leverage Ratios show how the amount of debt may effect the firm. 1. Total debt-to-assets ratio Total debt / Total assets 2. Debt-to-equity ratio Total debt / Total stockholders' equity 3 . Times-interest-earned or coverage ratio Operating income (EBIT) / Interest expenses Activity Ratios indicate how effective the firm's management uses its assets. 1 . Days of inventory 2. Inventory turnover Inventory / (Cost of goods sold / 365) Cost of goods sold / Inventory 3. Average collection period Accounts receivable / Average daily sales OR Accounts receivable / Total sales / 365 Market Value Ratios consider the value of the firm's stock in the financial markets. 1. Dividend yield on common stock Annual dividends per share / Current stock price 2. Price-earnings ratio Current stock price / Earnings per share Working capital, Internal cash flow, and Free cash flow have been omited since the meaaurements are not ratios. Ratios are us and make valid comparisons. Large companies will have higher working capital than smaller firms. This means only that the firm necessarily better. Thus, you should not use this amount. The current ratio uses the same numbers and standardizes to make a with competitors or the industry means. The cross-sectional analysis compares different firms' financial at least one ratio from each category below and compare the analysis evaluates the firm's financial performance over time to s you are expected to include a three-year time-series analysis for he most current data and cite your source and the effective date. hem and What They Mean What It Shows sales, assets, or owner's investments. Shows the percentage of revenues available to cover operating expenses and yield a profit. Higher is better and the trend should be upward . Shows the profitability of current operations without regard to interest charges and income taxes. Earnings before interest and taxes is commonly referred to as EBIT. Higher is better and the trend should be upward . Shows after-tax profits per dollar of sales. Higher is better and the trend should be upward . A measure of the return on total monetary investment in the enterprise. Interest is added to after-tax profits to form the numerator since total assets are financed by creditors as well as by stockholders . Higher is better and the trend should be upward . Shows the return stockholders are earning on their capital investment in the enterprise . A return in the 12-15% range is \"average,\" and the trend should be upward . This is one of the five performance targets in the BSG. Shows the earnings for each share of common stock outstanding . The trend should be upward, and the bigger the annual percentage gains, the better. This is one of the five performance targets in the BSG. Shows a firm's ability to pay current liabilities using assets that can be converted to cash in the near term . Ratio should definitely be higher than 1.0; ratios of 2 or up to 3 are better. Ratios over three are too conservative for the liquid assets should be invested in long-term assets that generate financial returns. This is similar to the current ratio however inventory is omited from the numerator. This is important for companies that hold relatively high inventories due to slow turnover or expensive products like yachts or recreational vehicles which may be stored for over a year. In this case this ratio would be a better comparison to its competitors. Ratio should definitely be higher than 1.0; ratios of 2 or up to 3 are better. Ratios over three are too conservative for the liquid assets should be invested in long-term assets that generate financial returns. Measures the extent to which borrowed funds (both short-term loans and long-term debt) have been used to finance the firm's operations. Companies use debt and equity to finance investment. Debt is less expensive to the company than equity. Thus, companies should carry enough debt to take advantage of the lesser cost but not too much debt to risk bankruptcy. Shows the balance between debt (funds borrowed both short term and long term) and the amount that stockholders have invested in the enterprise . The further the ratio is below 1.0, the greater the firm's ability to borrow additional funds. Ratios above 1.0 and definitely above 2 .0 put creditors at greater risk, signal weaker balance sheet strength, and often result in lower credit ratings. Ratios below 0.5 are very conservative. Since debt is cheaper than equity the company may be paying too much for its capital investments. Measures the ability to pay annual interest charges . Lenders usually insist on a minimum ratio of 2 .0, but ratios progressively above 3 .0 signal progressively better creditworthiness . Measures inventory management efficiency. Fewer days of inventory is usually better. Measures the number of inventory turns per year. Higher is better. Indicates the average length of time the firm must wait after making a sale to receive cash payment . A shorter collection time is better. A measure of the return that shareholders receive in the form of dividends . A \"typical\" dividend yield is 2- 3% . The dividend yield for fast-growth companies is often below 1% (maybe even 0); the dividend yield for slow-growth companies tends to be much higher. Slow growth firms have limited opportunities and thus disburse cash to their shareholders in dividends rather than capital gains or increases in share price. P-E ratios above 20 indicate strong investor confidence in a firm's outlook and earnings growth; firms whose future earnings are at risk or likely to grow slowly typically have ratios below 12 . Stock price is one of the five performance targets in the BSG e meaaurements are not ratios. Ratios are used to standardize an smaller firms. This means only that the firm is bigger and not he same numbers and standardizes to make allow comparion