BUS 401 Week 2 Discussion
|Company Ratio Analysis [WLOs: 1, 2] [CLOs: 1, 2]|
Financial analysts must evaluate the performance of the company and compare that performance over time. One way to evaluate the financial performance of a company is to calculate financial ratios. Ratios can be used to assess a company’s profitability, liquidity, efficiency, and financial risk (leverage). Changes in these ratios over time can alert a financial analyst to poor management or strong shareholder returns. For this discussion, you will calculate some common financial ratios for your chosen publicly traded company.
Prior to beginning work on this discussion forum,
- Read Chapter 11 of the Essentials of finance.
- Specifically review the “A Closer Look” feature box in Section 11.3.
- Complete the Week 2 – Learning Activity.
- Make sure you have completed the Week 1 – Assignment 1.
- Calculate two ratios for your chosen company, according to your last name and the list below. Using Appendix A from Week 1, calculate the ratios for your chosen company for the two most recent years available in the financial statements.
- Last names A through C: Return on assets (ROA) and return on equity (ROE).
- Last names D through F: Long-term debt to equity ratio and interest coverage ratio.
- Last names G through I: Gross profit margin and net profit margin.
- Last names J through L: Current ratio and quick ratio.
- Last names M through O: Inventory turnover and receivables turnover.
- Last names P through R: Days sales outstanding and days inventory outstanding.
- Last names S through U: Book value per share and price-to-book.
- Last names V through Z: Earnings per share and price-earnings (P/E) ratio.
Need help with your calculations? Check out the videos included in this resource: Week 2 Discussion Help (Links to an external site.). BUS 401 Week 2 Discussion