The purpose of the second part of the comprehensive project is to compute financial statement ratios. Based on the company you selected in Part I, complete the following:
Based on formulas in your textbook, compute the following ratios for two years. You may use Excel to compute your ratios.
Gross profit margin
Free cash flow
Times interest earned
Accounts receivable turnover
Prepare a DuPont Analysis of ROE for two years, including computations of
Return on Sales
Return on Assets
Return on Equity
Briefly evaluate the ratio trends. Indicate on your worksheet whether each ratio is:
stronger / weaker
more / less liquid
more / less risk
Write a 3-6 page report evaluating trends in all of the above ratios. Discuss whether your company’s profitability, efficiency, liquidity, and solvency are improving or deteriorating. Suggest ways the company can improve the ratios that show problems. The report should be well written with a cover page, introduction, the body of the paper (with appropriate subheadings), conclusion, and reference page. References must be appropriately cited.