Examine balance sheets to determine how different firms finance investment in assets. This assignment looks further at financial statements to analyze and compare the financial positions of firms competing in the same industry.

Choose two firms that compete within the same industry (e.g., J.C. Penney and Sears, Johnson & Johnson and Merck, Ford and GM).

Go to each firm's website, and then access and download their annual reports (financial statements).

Using the accounting data from the firms' financial statements calculateall ratios for each firm (liquidity ratios, activity ratios, profitability ratios, leverage ratios, and coverage ratios).

• Liquidity Ratios

-The Current Ratio

-The Quick Ratio

• Activity Ratios –

-Inventory Turnover

-Receivables Turnover

-Fixed Asset and Total Turnover

• Profitability Ratios

-Operating Profit Margin

-Net Profit Margin

-Gross Profit Margin

-Return on Total Assets

-Return on Equity

-Basic Earning Power

• Leverage Ratios

-Debt/Net Worth Ratio

-Debt Ratio

-DuPont System

• Coverage Ratios

-Times-Interest-Earned

Analyze and compare your calculations for the two firms.

Submit your findings and analysis. Be sure to include the web addresses of the firms whose websites you visited.

Answer rating: 100% (QA)

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