1. Business
2. Accounting
3. Financial Accounting & Bookkeeping
4. Financial Ratios
5. 54529

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Ratio Analysis Assignment

Action Items:

1. Write a two-page paper describing ratio analysis.
a. Outline the components of ratio analysis and how it is used in financial analysis and decision-making.
b. Include the strengths, weaknesses and limitations of using ratio analysis.
c. Describe the types of questions or information that ratio analysis can provide about a firm's financial situation and financial performance.

2. Select one of the companies below to analyze

Tootsie Roll, Inc
? http://www.tootsie.com/
? NYSE: TR

Yahoo, Inc
? http://yhoo.client.shareholder.com
? NASDAQ: YHOO

Tiffany, Inc
? http://www.tiffany.com/
? NYSE: TIF

Foot Locker, Inc
? http://www.footlocker-inc.com/
? NYSE: FL

3. Go to the firm's Website and download a copy of the last two years' financial statements. Usually you can find this information under the "Investors" section of the Website.

4. Prepare a two-year comparative ratio analysis using the ratios outlined below. You may use an Excel spreadsheet to show your comparisons or a Word document.

Liquidity Ratios
? Current Ratio
? Quick Ratio (Acid-Test)

Activity Ratios
? Inventory Turnover
? Receivables Turnover
? Fixed Asset Turnover

Profitability Ratios
? Operating Profit Margin
? Net Profit Margin
? Return on Equity
? Earnings Per Share

Leverage Ratios
? Debt/Net Worth Ratio (Debt to Equity Ratio)

Coverage Ratios
? Time Interest Earned

5. Prepare a one-page memo interpreting and summarizing your findings on the ratios. Give your conclusions about any changes that occurred from year-to-year. What corrective actions would you recommend based on the ratio analysis and why?
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Attachments

• RatioAnalysis.doc