Calculate selected ratios and obtain industry averages for comparison
For each of the six financial statement ratios listed below, use the Key Ratios form (Excel file) to calculate the ratio for the most recent year and for the prior year. siow the ratio or percentage with one decimal point, ror example: “2.1”, “15.7%” (Note that in most testbooks, some of the ratios call for averaging the begdnning and ending balances. However, for this projeet. use only the year’s ending balances.)
After calculating the ratio, find the indwry ratio as sbown in Moncyccntrnl's “Key Ratios” under “Fiaancial Results” and enter the industiy ratio in the indusny Average column of the Key Ratios form. Note that ia Moncycentral’s Key Ratios paee there are sis or seven groups or ratios ia which these ratios might be contained. (It is likely that some of the Mpncycentral’s ratios for your company will be different from the ones you calculute. Yours mwy be correct even though different. but double-check to make sure you are using the correct figures in your calculation.)
(1) Current Ratio
(2) Accounts receivable turnover
(3) Inventory tumnover (not applicable to service companies)
(4) Debt to Equity ratio
(5) Return on Equity
(6) Price earnings ratio (PIE Ratio) [Divide the current market price from a recent newspaper listing by the “basic” earnings-per-share sbown on the most recent year's income statement. Note that the Price/Earnings Ratio (PE Ratio) cbanges daily with the stock price. Submit the completed Key Ratios form (Excel file) for homework credit.