Assignment:
Q1. Using the two (2) stocks identified, General Electric and Amazon determine the Free Cash Flow from 2013 & 2014.
Free Cash Flow Formula
Net Income + Depreciation + Amortization + Non-cash Income - Net Working Capital
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Stocks
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Amounts
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NYSE- General Electric - GE
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2013
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2014
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Sales
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- Cost of Goods Sold
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- General Expenses
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+ Depreciation and amortization
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= EBIT*
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- Interest expense
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= EBT
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x Tax rate (example 30%) then subtract
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= Net Income
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Add:
Depreciation and amortization
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Less:
Changes in net working capital
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Less:
Capital expenditure
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Free Capital
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Stock
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Amounts
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NASDAQ - Amazon Inc - AMZN
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2013
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2014
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Sales
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- Cost of Goods Sold (COGS)
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- General Expenses
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+ Depreciation and amortization
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= EBIT*
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- Interest expense
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EBT
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x Tax rate (example 30%) then subtract
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Net Income
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Add:
Depreciation and amortization
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Less:
Changes in net working capital
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Less:
Capital expenditure
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Free Capital
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* EBIT = Earnings before interest and Taxes
Just transfer the answers from above and enter
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Free Cash Flows (FCF)
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Stock
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2013
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2014
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NYSE - General Electric
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NASDAQ - Amazon.com
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Q3. Using the most recent financial statements for both stocks, prepare two (2) financial ratios for each of the following categories: liquidity ratios, asset management ratios, and profitability ratios. You should have a total of six ratios for each stock, per year. What challenges, strengths, or weaknesses do you see? Please be articulate.
Liquidity ratio are Current & Quick ratios
Liquidity ratio - Current formula
Current assets ÷ current liabilities = current ratio
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Liquidity Ratio - Current
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NYSE- General Electric - GE
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2016
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2017
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Current assets
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÷ Current Liabilities
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Current ratio
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Liquidity Ratio - Current
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NASDAQ- Amazon- AMZN
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2016
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2017
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Current assets
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÷ Current Liabilities
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Current ratio
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Liquidity ratio - Quick formula
Current assets - inventories ÷ current liabilities = quick ratio
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Liquidity Ratio - Quick
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NYSE- General Electric - GE
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2016
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2017
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Current assets
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- Inventories
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÷ Current Liabilities
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Quick ratio
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Liquidity Ratio - Quick
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NASDAQ- Amazon- AMZN
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2016
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2017
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Current assets
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- Inventories
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÷ Current Liabilities
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Quick ratio
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Asset management ratios are: Total asset turnover, The fixed asset turnover, Accounts Receivable (Days Sales Outstanding) or (Average Collection Period) ratio and Inventory Turnover ratios.
Asset management ratios - Total asset turnover ratio formula
Sales ÷ Total sales = Total asset turnover ratio
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Asset management ratio - Total asset turnover
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NYSE- General Electric - GE
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2016
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2017
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Sales
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÷ Total assets
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Total asset turnover ratio
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Asset management ratio - Total asset turnover
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NASDAQ- Amazon.com- AMZN
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2016
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2017
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Sales
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÷ Total assets
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Total asset turnover ratio
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Asset management ratios - The fixed asset turnover ratio formula
Sales ÷ Net fixed assets = The fixed asset turnover ratio
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Asset management ratio - The fixed asset turnover
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NYSE- General Electric - GE
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2016
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2017
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Sales
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÷ Net fixed assets
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The fixed asset turnover ratio
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Profitability ratio - The fixed asset turnover
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NASDAQ- Amazon- AMZN
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2016
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2017
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Sales
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÷ Net fixed assets
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The fixed asset turnover ratio
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Profitability ratios are: Net - Operating and Gross profit margins ratios
Profitability ratio - Net profit margin ratio formula
Net income available to stockholders ÷ Sales = Net profit margin ratio
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Profitability ratio - Net profit margin
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NYSE- General Electric - GE
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2016
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2017
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Net Income available to Common Stockholders
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÷ Sales
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Net profit margin ratio
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Profitability ratio - Net profit margin
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NASDAQ- Amazon- AMZN
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2016
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2017
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Net Income available to Common Stockholders
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÷ Sales
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Net profit margin ratio
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Profitability ratio - Gross profit margin ratio formula
Sales - COGS + depreciation ÷ sales = Gross profit margin ratio
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Profitability ratio - Gross profit margin
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NYSE- General Electric - GE
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2016
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2017
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Sales
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- COGS
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+ Depreciation
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÷ Sales
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Gross profit margin ratio
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Profitability ratio - Gross profit margin
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NASDAQ- Amazon- AMZN
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2016
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2017
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Sales
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- COGS
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+ Depreciation
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÷ Sales
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Gross profit margin ratio
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