firm analysis

1. Choose two public companies in the same industry that you are interested in. (a) Which industry are you interested in? (b) Which companies did you choose? 2. Chapter 3. Financial Statements and Ratio Analysis Find the most recent annual financials (balance sheet, income statement, and cash flow) of each company on Google Finance and Yahoo Finance. (a) For each company, calculate the current ratio. What does this ratio measure? Which company do you think has a better ratio? (b) For each company, calculate the debt ratio. What does this ratio measure? Which company do you think has a better ratio? (c) For each company, calculate the total asset turnover. What does this ratio measure? Which company do you think has a better ratio? (d) For each company, calculate the net profit margin. What does this ratio measure? Which company do you think has a better ratio? (e) Find the P/E ratio of each company on Google Finance or Yahoo Finance. What does this ratio measure? Which company has a higher ratio? (f) Is your comparison in (b)-(e) a comparative analysis or a trend analysis? 3. Chapter 8. Risk and Return (a) Find the beta of each company on Yahoo Finance. Which one has a higher beta? (b) What does the beta measure? (c) Based on the betas you found in (a), which company should have a higher expected return? 4. Let's assume that you can choose only one of the companies that you have analyzed for investment. Which one would you choose? And what is your reason for that choice? Useful Websites - Google Finance (https://www.google.com/finance) - Yahoo Finance (https://finance yahoo.com)