Select a publicly traded U.S. company that has paid a dividend for at least the last three years, and conduct a financial ratio analysis. The company must have data available for you to conduct a financial ratio analysis. It's important to select a company in an industry that has industry ratio numbers.
Calculate all the following ratios for the company for the past three years and compare them to the appropriate industry benchmarks:
Liquidity ratios:
Current
Quick
Asset Management ratios:
Inventory turnover
Total assets turnover
Fixed assets turnover
Days sales outstanding
Debt Management ratios:
EBITDA coverage
Times-interest-earned
Total debt to total assets
Profitability ratios:
Return on common equity
Return on total assets
Basic earning power
Profit margin on sales
Market Value ratios:
Market/book
Price/earnings
Price/cash flow
Complete the following in a Word document covering 3-4 pages:
Create a table that contains the ratios for the various years.
Then analyze the information (explain).
Look at the trends in the ratios and comment on how they compare to the industry benchmarks.
Which ratios are strong?
Which ratios need improvement?
If you were a stock investor, would you buy the company's common stock? Why or why not?
If you were a bond investor, would you buy the company's bonds? Why or why not?