Response to the following problem:
Obtain and compare annual reports from companies in the same industry
Insight concerning the performance and financial condition of a company often comes from evaluating its financial data in comparison with other firms in the same industry
Required:
Obtain annual reports from three corporations in the same primary industry. Using techniques you learned in this chapter and any analysis you consider useful, respond to the following questions:
1. Are there differences in accounting methods that should be taken into account when making comparisons?
2. How do earnings trends compare in terms of both the direction and stability of income?
3. Which of the three firms had the greatest earnings relative to resources available?
4. Which corporation has made most effective use of financial leverage?
5. Of the three firms, which seems riskiest in terms of its ability to pay short-term obligations? Long-term obligations?