[solved] Assignment Financial Statement Analysis:

Assignment Financial Statement Analysis:

Your team has been assigned to the CEO of a major company.  The CEO keeps an eye on the competition, and asks your team to do the following:  Following the 2016 R DMBA Sample Week 3 Answer, use ratio analysis to compare two major competitors in the same industry and compare them to the industry ratios.  The sample compares Southwest Airlines Company with Jet Blue Airline Company.

1. Create a single Excel file for your entire assignment.  

2.The team may obtain financial information and the companies' latest annual reports on the web directly from the Securities and Exchange Commission for the company website.  MSN Money or Yahoo Finance also have information but in some situations, it may be incomplete.  Current stock price information is not available from the SEC web site.   

3. The team should calculate, and comment upon, at least 10 financial ratios for the last 2 fiscal years.

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

5. 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 and http://www.bizstats.com/corporations.asp?profType=ratios 

6.Whenever the team uses balance sheet items to calculate ratios, it is more accurate to average the beginning-of-year and end-of-year amounts to get the average for that year.  Dec 31, 2014 and Dec 31, 2015 would be beginning and end of year for 2015.  Note: Averaging is NOT required.  For some students taking averages leads to calculation mistakes.  The example answer does not use averaging and includes most if not all possible ratios.

7. What can the team tell from the analysis?  What are the strengths and weaknesses of each company?   Which is the stronger competitor? Give reasons.

8. Show that you have read and understood the required readings, links and attached files - cite and reference them where appropriate.  

9. The final Excel file should be submitted by one team member into the Group Assignment folder.

Team assignment requirement checklist:

1.  Evaluate short-term solvency ratios  

2.  Evaluate profitability in relation to revenues 

3.  Evaluate profitability in relation to equity 

4.  Calculate the 4 ratios of the DuPont Analysis and evaluate what they mean for strategy, these ratios are ROE, Profit Margin on Sales, TATO and the Equity Multiplier.

5. Evaluate long-term solvency   

6. Evaluate market value ratios (not just book value ratios)   

7. Correctly interpret results for items above.  At random, we will test a few calculations for accuracy  

8. Combine all findings into a coherent final summary     Each item above carries roughly equal weight 

Below is the companies used for comparison - 

Google:

Key Ratios for GOOGL

http://financials.morningstar.com/ratios/r.html?t=GOOG

Microsoft:

Key Ratios for MSFT

http://financials.morningstar.com/ratios/r.html?t=MSFT

Also, attached is the start of our spreadsheet. I have also uploaded it to the Google Drive. All info was retrieved from sec.gov as well as MorningStar. Everything is RED is an example. We will also have to amend the compared calculations from each income statement, balance sheet, and cash flow statement.