Your assignment is to analyze current financial ratios for a given business.
1. Think of a specific business you find interesting, i.e. Apple, UTC, Southwest Airlines, etc.
2. Search the web for that business Financial Statement. (You will find many hits for the data.)
3. Select the http://www.morningstar.com/ site offering your companys financial statement.
4. You will now see a number of financial ratios for your company. Below is an example for Apple: http://financials.morningstar.com/ratios/r.html?t=AAPL
5. Now, define the following ratios, note the ratio for your business, and explain what the ratio means for the business moving forward:
a) Return on Assets
b) Return on Equity
c) Return on Capital
d) Gross Margin
e) SG&A Margin
f) Current Ratio
g) Quick Ratio
h) Total Debt/Equity
i) Total Revenue
j) Gross Profit
Here are some additional resources:
Apple (Return on Assets): https://ycharts.com/companies/AAPL/return_on_assets
Ratios: https://www.stock-analysis-on.net/NASDAQ/Company/Apple-Inc/Ratios/Profitability/Quarterly-Data#Ratios-Summary
Use the following guidelines:
Use APA format with a title page, in-text citations and references. No abstract required.
Research and cite at least 2 credible sources in APA format.
Assignment Organization and Clarifications:
There are multiple parts to this assignment. Please organize your paper accordingly. I recommend using Headings in APA formatting – incorporate a separate Heading for each Ratio or number each Ratio
1. Identify and number/letter each ratio. Provide a separate paragraph for each ratio or use a table format.
2. Please make sure to explain specifically what each ratio means to the business moving forward. This assignment is looking for you to analyze each ratio for your select business, beyond just supplying definitions.
Many times, a comparison of previous years can be helpful in determining what the ratio currently means. Another method of determination is by looking at a competitors ratios. For example, a Quick Ratio of 1.0 or higher indicates that a company is fully capable of liquidating its short-term liabilities without financial support. Netflix reported a Quick Ratio of .58 in 2019. The analysis of this ratio would indicate that Netflix needs to increase its quick ratio to at least 1.0 in order to be able to pay off its current liabilities more rapidly.
