This is what the three pages will consist of :
Ratio Analysis: In this section complete and analyze the ratios below. Discuss what they are saying about the companies performance.
Beta: A measure of risk that is usually published and not calculated by you (A beta greater than 1 suggests that the company is more volatile/risky than the market)
Current ratio = Current Assets/Current Liabilities (A current ratio greater than 1 means the company has enough assets to cover all current liabilities should the need arise)
Quick ratio = (Current Assets – Inventory)/Current Liabilities (When you are dealing with a company that carries a lot of inventory, a quick ratio is a better indicator than a current ratio because it acknowledges that inventory is not typically liquid).
Total Asset Turnover = Net sales/Total Assets (Total asset turnover measures the dollar amount of sales generated with each dollar of total assets. Generally, the higher the total asset turnover, the more efficient management is using total assets.
Profit Margin = Net Income/Sales (Represents how much of each dollar in sales remains after all costs are covered)
Return on Equity = Net income/Total equity (Represents the return for all holders of equity in that company)
EBIT Return on Assets = EBIT/Total assets (Represents the pre-tax return on the total net investment in the firm from operations or alternatively, how efficiently management has used assets)
Debt-equity ratio = Total debt/Total equity (Represents the long term solvency or financial leverage in that company)
Conclusion:
In this section, answer the following: What are the most important things you have discovered in your analysis? What are some conclusions you reached? What are the highlights of your paper?
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