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Question:

Did you know that you can get ratios calculated for you free of charge? Go to www.ratioanalysis.net. You choose a ratio across the top bar and then input the amounts from the financial statements. The website will then calculate the ratios for you.

Required:

1. Obtain the most recent income statement and balance sheet for two companies in the same industry.

2. Compare the two companies based on profitability ratios. Which company appears more profitable?

3. Compare the two companies based on liquidity and leverage ratios. Which company appears more risky?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...