This assignment will require to perform some analysis of financial ratios and some research to further my understanding of financial ratios from other sources.

I need to select an industry (Aviation) and two firms (Delta Airlines and Spirit Airlines) within the industry and analyze the Return on Equity (ROE) of both firms and the market valuation ratios.

For this assignment the main focus is on one ratio which can actually be calculated using three other ratios. That ratio is the Return on Equity.

The second set of ratios I will need to consider are market value ratios. How does the firm selected compare to industry averages, main competitor(s) etc.

Need to select an industry using the S&P Net advantage database and download the data. Select two firms (Delta Airlines and Spirit Airlines) one with a relatively high ROE and one with a relatively low ROE in the industry.

Some thoughts to keep in mind: Margins reflect the firm's production function. If margins are low what could be done to improve them? Total asset turnover deals with the marketing function. If turnovers are low what might a firm wish to consider to improve its performance? Equity ratio is the finance province. Issues to consider are if you are being too conservative (not employing enough cheap debt)?

For the deliverable:

1. Include the downloaded industry spreadsheet for the industry selected.
2. Identify the firms selected within the spreadsheet by changing the color of the font for that firm on each tab to red.
3. Table that calculates the ROE for each firm using the three components. Make sure each column is labeled. (5 columns that are labeled ROE, Net Profit Margin, Asset Turnover, Equity Ratio)
4. Similar table for the market value measures.

Brief paper; about two pages maximum (2 plus/minus a half page). Paper should address the reasons why one firm has a high ROE, why one firm has a low ROE and what could be done to improve the lower performing firm based on ROE (if it is really performing at a lower level). Perform similar contrast and comparisons for the market value ratios. Marketing, asset utilization, financing challenges if any of the firms appears to be under or overvalued.

This is the end of the question, thanks!