Case 1 – Ratio Analysis

Case 1 – Ratio Analysis

1. Go to the end of chapter 1 in text, to “ongoing project”
2. Select two companies in the same or similar industries
3. Go to SEC Edgar and find their most recent 10K (or the company’s website under “Investor Relations”, SEC Filings and search “annual” filings
4. Download an Excel version of the 10K
5. Find the financial statements and address the following questions:
   1. What standards do the companies follow
   2. Date of the statements and who are the auditors
   3. Prepare “common sized” income and balance sheets
   4. What are the trends in each companies’ financial statements
   5. Compare the common sized financial statements – which company do you believe is performing better and why

1. Go to the end of chapter 4 in the text. For the financial statements downloaded in part A:
2. Compute the ROE for all three years presented for each company.
3. Compute the ROA and RNOA. Compute the profit margin and asset turnover ratio; as well as the net operating profit margin and net operating asset turnover ratio.
4. Review the results and compare the two companies.
5. Which company is performing better (and why)?
6. Which company is trending more favorably?
7. Review the balance sheet and calculate the quick ratio, current ratio, debt ratio and debt to equity ratio.
8. Discuss the trends in liquidity and solvency for the two companies
9. Which company is most liquid?
10. Which company is most solvent?