financial analysis

Project Description:

this is an economic task task i was given. you can choose any two companies just please follow the strict guidelines for excel. i will add the file drug store for the example just in case you need it. the ten ratios i have chosen for the task are short term liquidity, profitability, return on investment, long term solvency,market ratio, cash flow, ebit, intrest expense,pre tax income, and gross operating expenses. this task will be alot easier than the example because you are only computing and comparing 10 ratios for each company instead of the many in the example.

here is the task instructions from my instructor:

financial statement analysis

our purpose this week: learning how to measure the performance of companies by analyzing their financial statements. show us that you have read and understood the required readings, links and attached files - quote them where appropriate.

task:

you are the assistant to the ceo of a major company. your ceo keeps an eye on the competition, and asks you to do the following. using ratio analysis, compare two major competitors in the same industry.

instructions:

pick any two u.s. public companies in the same industry.

one of your two companies can be the same company you used in week 2.

select the 10 most important financial ratios for your two companies and calculate each for the last 2 fiscal years using excel.

follow the same format as in the examples posted in the file attached in the week 3 conference for the drugstore chains example. use the "compare" worksheet. the "w", "c", and dupont analysis are required and "profiles" and "z score" worksheets are not required,.

create a single excel file for your entire task.

you may obtain financial information and the companies' latest annual reports on the web directly from msn money or yahoo finance or morningstar. for additional information, look for the sec form10-k link from one of the msn money, or morningstar, or yahoo finance financial sites.

you should calculate, and comment upon, all 10 financial ratios for the last 2 fiscal years.

all calculations should be shown, and all answers should be thoroughly explained.

it is useful to compare financial ratios for a company with financial ratios of its industry. industry financial ratios can be found on morningstar.com, yahoo finance and msn money.

when using balance sheet items to calculate ratios, for each year be sure to average the beginning-of-year and end-of-year amounts to get the average for that year.

what can you tell from your analysis? what are the strengths and weaknesses of each company? which is the stronger competitor? give your reasons.

your excel file should be attached to the “week 3 individual task” link in the task folder.
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