Section Objective

The objective of this report is to analyze the financial performance of your company by computing and analyzing financial statement ratios.

Instructions

You will need to address all the following topics:

1. Inform your readers how the part 2 objective aligns with the project objective.
2. Select the most pertinent ratios from each category (Liquidity, Solvency, and Profitability).
3. Calculate and compare the ratios of the competitor. In order to aid your analysis, you should compare the financial performance of your company with at least one competitor over the past two years.
4. Discuss trends over time and in relation to at least one competitor. Discuss the reason for the change by referring to the context of the company and the industry in which the company operates.
5. Provide a brief summary of your findings in your conclusion and inform your readers of what your next steps are within the project objective.
6. Include your calculations as an appendix to your report.

Tools and Methods

Your analysis should focus on the following financial categories as highlighted in the textbook under the chapter 'Financial Statement Analysis.'

• Liquidity
• Solvency
• Profitability

The specific ratios and formulas for each of the three categories above are provided in your textbook reading. You can choose to calculate all the ratios provided in the textbook reading and include your calculations in your appendix. However, you do not need to discuss all the ratios in your main discussion. You will have to use your understanding of the company to select the most pertinent ratios. For example, while the inventory turnover ratio is a very common ratio it may not be applicable to a service company that does not deal with an inventory.

Calculating the Du Pont ratio is an excellent way to analyze the overall performance of your company. The Du Pont ratio is a way of disaggregating the Return on Equity ratio into the three categories of liquidity, solvency, and profitability. A quick online search on 'Du Pont Ratio' will provide you with plenty of links on the Du Pont ratio. As an example, theCorporate Finance Institute(Links to an external site.)

is a useful source of information.

Use theLibrary's research guide(Links to an external site.)

.

A report that includes 4-5