Re-post ratio analysis memo | Accounting homework help

Resources: Financial Statements

 

Browse the Internet to acquire a copy of the most recent annual report for a U.S. publicly traded company. The following corporations are acceptable – if you wish to use any other company you must receive my approval first. 

 

  1. Target
  2. Macy’s
  3. Home Depot or Lowe’s
  4. Yum or Darden Restaurants
  5. Walgreens or CVS
  6. Krispy Kreme
  7. Amazon

 

 

Locate the company’s most recent annual report (you can typically find this report at the company’s Web site at the bottom of the site under “Investors”. You will use this information (as well as some research you will conduct on the Web to find the information listed below.  Yahoo Finance at http://finance.yahoo.com/ can be a helpful resource for this project as well.

 

Access the information contained in your selected organization’s balance sheet and income statement to calculate the following:

 

Liquidity ratios

 

Current ratio

Acid-test, or quick, ratio

Receivables turnover

Inventory turnover (you would need to select a company that sells inventory for this purpose)

 

Profitability ratios

 

Asset turnover

Profit margin

Return on assets

Return on common stockholders’ equity

 

Solvency ratios

 

Debt to total assets

Times interest earned

 

Show your calculations for each ratio.  Explain what the ratio results mean.  For example, if you calculate inventory turns and your number is 6, please interpret this number (this means that inventory is ‘turned’ six times a year (or that it takes around 60 days to sell inventory items).  Simply providing a number without interpreting what that number means is not enough. 

 

Create a horizontal and vertical analysis for the balance sheet and the income statement.

 

Write a 700- to 1,050-word memo to the CEO of your selected organization in which you discuss your findings from your ratio calculations and your horizontal and vertical analysis. In your memo, address the following questions:

 

What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company?

Which users may be interested in each type of ratio?

What does the collected data reveal about the performance and position of the company?

 

Format your memo consistent with APA guidelines.  Use Times New Roman 12 pt double-spaced.  Ensure that you present your analysis in a format so that I can readily see all the results (a table would be the best approach).  Note that these results would not be considered toward the memo word count.

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