Choose large, well known companies that are publicly traded on the stock market. Private companies do not make financial information or really any general information available to the public. Large traded companies like Target, Ford, Apple, etc. are easy to find this type of information on. We recommend you go straight to Hoover’s Pro database to find a company profile. This database is the best database available for this type of information.Calculate the following ratios for the company that you select:
- Return on assets
- Return on equity
- Gross profit margin
- Debt to equity ratio
- Debt ratio
- Current ratio
- Quick ratio
- Inventory turnover
- Total asset turnover
- Price earnings ratio
Using the calculated ratios, analyze the financial performance of the firm. You will do this by looking at the ratios and comparing them to ratios from previous periods and in some cases, against their competitors. Keep in mind that you are trying to determine how the firm is performing under each of the listed ratios. In a memo to the chief executive officer (CEO), include the following:
- Explain the ratios that you calculated.
- Address other methods of analyzing financial statements aside from ratio analysis.
- Explain your analysis of the firm, and make recommendations for improvement.