Question: Analyzing Financial Statements
a) Select two competing companies (publicly traded) to analyze for the most recent year financial data is available.
b) Compute the following liquidity ratios for each of the companies, and comment on the relative liquidity of the two competitors.
I) Current ratio.
ii) Receivables turnover.
iii) Average collection period.
iv) Inventory turnover.
v) Days in inventory.
vi) Current cash debt coverage.
c) Compute the following solvency ratios for each of the companies, and comment on the relative solvency of the two competitors.
i) Debt to total assets ratio.
ii) Times interest earned.
iii) Cash debt coverage ratio.
iv) Free cash flow.
d) Compute the following profitability ratios for each of the companies, and comment on the relative profitability of the two competitors.
i) Profit margin.
ii) Asset turnover.
iii) Return on assets.
iv) Return on common stockholders' equity.