You have been asked to evaluate the balance sheet, income statement, and statement of cash flows for a firm- but you have a relatively short time to do so.

If you had to choose only four financial ratios to conduct your preliminary analysis, which four would you choose, and why would you select them

There are several different categories of potential ratio analysis; profitability ratios, leverage ratios, liquidity ratios, and market price ratios. Was each of your ratios selected in item one represented in the main categories listed? If not, list what type of information would be missed by eliminating that category in your evaluation of the firm's financial position.

One of the most important concepts of ratio analysis is the decomposition of ROE noted in your text on page 453, equation 14.3. The DuPont formula defines the net return on shareholders equity as a function of the following components:

Operating margin

Asset turnover

Interest burden

Financial leverage

Income tax rate

Calculate each of these five components for GE, using their 2014 and 2015 10k results and last 10Q available. Using those results, also calculate their ROE for those three periods- 2014, 2015, and the last 10Q available.

Briefly, discuss the source and impact of the changes in ROE over those periods- and note how the deconstructed ROE measures can help you identify what factors change in a company that can mask a change in ROE.