Financial Statements and Analysis

Deliverable Length: ;Word document of 500-800 words with attached Excel spreadsheet showing calculations

Assignment Objectives

Calculate and analyze financial ratios, make recommendations for improvement in financial performance.

Analyze financial statements; develop cash flow analysis, and pro forma statements.

Use effective communication, team and problem-solving skills to collaborate on a project.

Library Research Assignment

Locate a publicly traded U.S. company of your choice. Then, calculate the following ratios for the company for 2012 and 2013:

• Liquidity Ratios
• Current ratio [current assets / current liabilities]
• Quick ratio [(current assets – inventory) / current liabilities]
• Asset Turnover Ratios
• Collection period [accounts receivable / average daily sales]
• Inventory turnover [cost of goods sold / ending inventory]
• Fixed asset turnover [sales / net fixed assets]
• Financial Leverage Ratios
• Debt-to-asset ratio [total liabilities / total assets]
• Debt-to-equity ratio [total liabilities / total stockholders’ equity]
• Times-interest-earned (TIE) ratio [EBIT / interest]
• Profitability Ratios
• Net profit margin [net income / sales]
• Return on assets (ROA) [net income / total assets]
• Return on equity (ROE) [net income / total stockholders’ equity]
• Market-Based Ratios
• Price-to-earnings (P/E) ratio [stock price / earnings per share]
• Price-to-book (P/B) ratio [market value of common stock / total stockholders’ equity]

You are now ready to interpret the ratios that you have calculated. If a ratio increased from 2012 to 2013, why do you think that it increased? Is it a good or bad sign that the ratio increased? Please explain.

If a ratio decreased from 2012 to 2013, why do you think that it decreased? Is it a good or bad sign that the ratio decreased? Please explain.

If a ratio was unchanged from 2012 to 2013, why do you think that it was unchanged? Is it a good or bad sign that the ratio was unchanged? Please explain.