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.

Comprehensive Investment Analysis – Part 2: Financial Statement Analysis

Please review the Comprehensive Investment Analysis Overview to get familiarized with the project objective.

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 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 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, the Corporate Finance Institute

 (Links to an external site.)

is a useful source of information.

Use the Library’s research guide

 (Links to an external site.)

.

Submit a report that includes 4-5 pages of the main discussion besides the appendix. The format should be double-spaced, one-inch margins, using a 12-point Times New Roman font.

Links: 

https://corporatefinanceinstitute.com/resources/knowledge/finance/dupont-analysis/

Turnitin®

This course has Turnitin® fully integrated into the course dropbox. This means that you should only submit your assignments to the dropbox below. Please do not submit your assignment directly to Turnitin.com.

Once submitted, your assignment will be evaluated by Turnitin® automatically. You will be able to view an Originality Report within minutes of your first submission that will show how much of your work has been identified as similar to other sources such as websites, textbooks, or other student papers. Use your Originality Report as a learning tool to identify areas of your assignment that you may not have cited appropriately. You may resubmit your assignment through this dropbox as many times as you need to check to see if you have made improvements, until the due date of the assignment. However, once you have made your first submission, you will need to wait 24 hours after each subsequent submission to receive a new Originality Report. Plan accordingly as you draft your assignment. Once the due date has passed, your assignment submission will be considered final.

Evaluation

This assignment will be graded using the rubric located on the Course Rubrics page within the Start Here section of the course. Please review the rubric prior to beginning your work so that you ensure your submission meets the criteria in place for this assignment. The Case Study Project assignments, together, are worth 30% of your final course grade.