Ratio analysis
Not what you're looking for?
Dear Vineet Swarup,
Please see the attached file and help me to answer these 2 questions.
Thank you
1. Without crossing the line in terms of confidentiality, share with us a financial item (Balance Sheet related) that changed significantly from 2006 to 2007 or 2005 to 2006, review annual reports for a publicly held company and do the same. More importantly, explain what caused the significant change.
2. Using the sources cited in Exhibit 16-7, Pg. 734 of the Textbook, compare industry averages against a company of your choice, for 5 ratios (you pick which ones). Comment on whether you think the industry averages are "better" than yours or not.
Source Content
Amanac of Business and Industrial An exhaustive source that contains common
Financial Ratios. Aspen Publishers; size income statements and financial ratios
Published annually by industry and by the size of companies
within each industry.
AMA Annual Statement Studies, Risk A widely used publication that contains
Management Association; common-size statements and financial
Published annually ratios on individual companies; the
Companies are arranged by industry.
EDGAR, Securities and Exchange An exhaustive Internet database that
Commission; website that is contains reports filed by companies
Continually updated: www.sec.gov with the SEC; these reports can be
Downloaded.
Free Edgar, EDGAR Online, Inc.; A site that allows you to search SEC
Website that is continually updated; filings; financial information can be
www.freeedgar.com downloaded directly into Excel worksheet.
Hoover's Online, Hoovers, Inc.; A site that provides capsule profiles for
Website that is continually updated; 10,000 U.S. companies with links to
www.hoovers.com company websites, annual reports, stock
charts, news articles, and industry info.
Industry Norms & Key Business Fourteen commonly used financial ratios
Ratios, Dun & Bradstreet; are computed for over 800 major industry
Published annually. Groupings.
Mergent Industrial Manual and An exhaustive source that contains financial
Mergent Bank and Finance ratios on all companies listed on the New
Manual; published annually York Stock Exchange, the American Stock
Exchange, and regional American
Exchanges.
Standard & Poor's Industry Survey, Various statistics, including some financial
Standard & Poor's; published annually. Ratios, are given by industry and for
Leading companies within each industry
Grouping.
Purchase this Solution
Solution Summary
The solution has two questions - review of a balance sheet item that changed significantly and a comparison of ratios with industry average
Solution Preview
Please see the attached file.
1. Without crossing the line in terms of confidentiality, share with us a financial item (Balance Sheet related) that changed significantly from 2006 to 2007 or 2005 to 2006, review annual reports for a publicly held company and do the same. More importantly, explain what caused the significant change.
In my company we acquired a significant client in the year 2007. This necessitated that we increase our resources to address the needs of the client. Pending the IPO of the firm, we took on a bridge loan from the bank. This resulted in a sharp increase in our borrowings, which more than doubled.
For the publicly held company, I have selected GE. While most of the items have changed, the most significant change (taken in relation to the percentage change) is Assets of discontinued operations. The figure was $8,756 million in 2006 and reduced to $66 million in 2007, a change of 99.2%. The reason for the same is provided by the company in Note 2. It states that many business were classified as discontinued operations. In 2007 some of these businesses were sold and that led to the reduction in assets of these discontinued operations. The businesses sold in 2007 were U.S. mortgage business in response to the sub prime crises and Plastics and Advanced Materials business ...
Purchase this Solution
Free BrainMass Quizzes
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Accounting: Statement of Cash flows
This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
Business Ethics Awareness Strategy
This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.
Marketing Research and Forecasting
The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.