Explore BrainMass

Financial Statement Analysis for U.S Public Company

Financial Statement Analysis

Our purpose this week: learning how to measure the performance of companies by analyzing their financial statements. Show us that you have read and understood the required readings, links and attached files - quote them where appropriate.


You are the assistant to the CEO of a major company. Your CEO keeps an eye on the competition, and asks you to do the following. Using ratio analysis, compare two major competitors in the same industry.


Pick any two U.S. public companies in the same industry. ( I WANT TO USE DELTA AIRLINES AND SOUTHWEST AIRLINES)

One of your two companies can be the same company you used in Week 2.

Select the 10 most important financial ratios for your two companies and calculate each for the last 2 fiscal years using Excel.

Follow the same format as in the examples posted in the file attached in the Week 3 Conference for the Drugstore Chains example. Use the "Compare" worksheet. The "W", "C", "Profiles" and "Z Score" worksheets are not required, and nor is the Dupont Analysis.

Create a single Excel file for your entire assignment.

You may obtain financial information and the companies' latest annual reports on the web directly from MSN Money or Yahoo Finance or Morningstar. For additional information, look for the SEC Form10-K link from one of the MSN Money, or Morningstar, or Yahoo Finance financial sites.

You should calculate, and comment upon, all 10 financial ratios for the last 2 fiscal years. (YEAR 2014 AND 2013)

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

It is useful to compare financial ratios for a company with financial ratios of its industry. Industry financial ratios can be found on, Yahoo Finance and MSN Money.

When using 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.

What can you tell from your analysis? What are the strengths and weaknesses of each company? Which is the stronger competitor? Give your reasons.


Solution Summary

The expert examines learning how to measure the performance of companies by analyzing their financial statements. The response addresses the query is posted in the excel file attached.