Share
Explore BrainMass

Comparison of two major competitors in the same industry

Instructions:

- The reason for requiring you to use Excel is that I need to see your calculations and Excel enables me to see them.

- For assigned problems that require you to find the rate of interest or the rate of growth (the rate of interest is the same thing as the rate of growth), please use the Excel RATE function for a quick and easy solution.

- All financial statements used should be shown.

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

Using ratio analysis, compare two major competitors in the same industry

Using IBM and HP information (see attached) follow the same format as in the Pepsi and coca-cola example (see attached) create a single spreadsheet with appropriate entries : There are three separate financial statements to analyze: a. the income statement, b. the balance sheet, and c. the cash flow statement.

Calculate, and comment upon:
1. All relevant financial ratios for the last 2 fiscal years, including market ratios (such as PE ratios and market to book value of equity) and a full DuPont analysis.
2. Whenever you use balance sheet items to calculate ratios, for each year be sure to average the beginning-of-year and end-of-year amounts to get the average for that year.
3. What can you tell from your analysis?
4. What are the strengths and weaknesses of each company?
5. Which is the stronger competitor? Give your reasons.

Attachments

Solution Preview

Conclusions
Both are very profitable and very solvent corporations that are conservatively financed.
Both are lower growth, mature ...

Solution Summary

This tells the steps to compare two major competitors in the same industry with the help of financial analysis

$2.19