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Ratio calculations - balance sheet

Access the information contained in your selected organization's balance sheet and income statement to calculate the following:

Liquidity ratios

* Current ratio

* Acid-test, or quick, ratio

* Receivables turnover

* Inventory turnover

Profitability ratios

o Asset turnover

o Profit margin

o Return on assets

o Return on common stockholders' equity

Solvency ratios

o Debt to total assets

o Times interest earned

Show your calculations for each ratio.

Create a horizontal and vertical analysis for the balance sheet and the income statement.

Write a 350- to 700-word memo to the CEO of your selected organization in APA format which discusses your findings from your ratio calculations and your horizontal and vertical analysis. In your memo, address the following questions:

· What do the liquidity, profitability, and solvency ratios reveal about the company's financial position?

· Which users may be interested in each type of ratio?

· What does the collected data reveal about the company's performance and position?

Solution Preview

Solution:

Disclaimer: This is only a guide to help you complete your assignment but not to give you direct answers to your task.

One effective way to approach this problem is to visit marketwatch.com. This is a very useful site to find the information you need about any organization as it pertains to is financial position in comparison to other business firms.

One example you can use is the company Google Inc. Here is the shortcut to the link: http://www.marketwatch.com/investing/stock/goog

When you get to the site look for a title labeled 'financials' - that will take you to an appropriate ...

Solution Summary

Ratio calculations for balance sheets are provided. Avid-test or quick ratios are given.

$2.19