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Comparing Financial Conditions of Competitors

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What are some methods used to compare the financial condition of a competing organization?

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It is important for an organization as well as the investor to analyze the financial condition of an organization. An organization utilizes different methods of comparing the financial condition of a competing organization, in order to enhance the effectiveness of its financial condition. In the financial condition the assets, liabilities and equity of a firm are assessed. The situation of these assets and liabilities are taken for a particular time period in order to compare the firm's own monetary condition.

Comparison methods:

There are various methods, which an organization may use to compare the financial condition, which are as described below:

Vertical analysis - The first method, ...

Solution Summary

The solution provides explanation of three methods of analysis and one relevant financial ratio to be used when comparing the financial states of market competitors. 424 words with references.

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


- 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.

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