(a) Select two competing companies (publicly traded) to analyze for the most recent year financial data is available.
(b) Compute the following liquidity ratios for each of the companies, and comment on the relative liquidity of the two competitors.
i) Current ratio.
ii) Receivables turnover.
iii) Average collection period.
iv) Inventory turnover.
v) Days in inventory.
vi) Current cash debt coverage.
(c) Compute the following solvency ratio for each of the companies, and comment on the relative solvency of the two competitors.
i) Debt to total assists ratio.
ii) Times interest earned.
iii) Cash debt coverage ratio.
iv) Free cash flow.
(d) Compute the following profitability ratios for each of the companies, and comment on the relative profitability of the two competitors.
i) Profit margin.
ii) Asset turnover.
iii) Return on assets.
iv) Return on common stockholders' equity.
(e) Which of the two companies would you prefer to invest in? Why, and under what circumstances? Explain.
The two companies that have been selected for the analysis are Delta Air Lines ...
The two companies that have been selected for the analysis are Delta Air Lines and Southwest Airlines.
Answer includes : Liquidity Ratio, Solvency Ratio, Profitability Ratio along with the description and overall performance and comparison of both the companies and price chart comparison.
Detailed analysis attached