Evaluate Financial Statements and Financial Ratios

Select a company of interest to you and a primary competitor of that company. The companies must be publicly traded and they should not be financial institutions such as banks, insurance companies, or securities firms. They also must not be non-profit organizations. You might access www.hoovers.com and/or http://finance.yahoo.com for ideas about potential companies and competitor firms. After selecting a company of interest and a competitor, go to the investor relations area of the companies’ websites and view their most recent annual report.

Create a PowerPoint presentation in which you address the following:

  1. Assess the nature of the operation of each company. Describe the risks that each company seems to face as it strives for higher profitability and valuation in the financial markets.
  2. Present the past 2 years of financial statements (balance sheet and income statements) for each company in a single table. Discuss the trends you see in the key metrics as well as the comparisons you can make between the companies from these statements.
  3. Recommend relevant financial ratios and compare these ratios across the two companies. Present the ratios calculations in a table format using Excel, and then copy and paste that table into your PowerPoint document. The ratios should include profitability, liquidity or short-term solvency, debt management, inventory management, accounts receivable management, and the decomposition of the ROE.
  4. Evaluate each ratio category and form a conclusion regarding which company appears to be healthier for each category as well as overall. Be sure to spend meaningful effort to assess and discuss the ROE decomposition and the meanings you take from it.

Incorporate appropriate animations, transitions, and graphics as well as “speaker notes” for each slide. The speaker notes may be comprised of brief paragraphs or bulleted lists. Support your presentation with at least three scholarly resources. In addition to these specified resources, other appropriate scholarly resources may be included. Be sure to include citations for quotations and paraphrases with references in APA format and style where appropriate.

Length: 10-15 slides (with a separate reference slide)
Notes Length: 100-150 words for each slide