Financial leverage - ratio analysis, Financial Accounting

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Provide a brief (one typed page) discussion of analysis of the ratios of your company versus the competitor and the industry, addressing your company's liquidity, solvency, profitability, and efficiency. Make sure to discuss any significant year-to-year changes including whether the company's situation has deteriorated or improved with respect to liquidity, solvency, asset management, and profitability. Books that provide industry averages, such as Almanac of Business and Industrial Financial Ratios, Industry Norms and Key Business Ratios, S&P's Industry Surveys, and Mergent's Industry Review, are available in the library. Some of the information is also available on the internet at MSN and Yahoo. (Present the ratios for your company versus competitor the industry in an Excel file with four columns: ratio name, the company's ratios, the competitor's ratios, and the industry average ratios.)  Use the ratios to answer each of the following questions with explanations:

a. Is it becoming easier for the company to meet its current debts on time and to take advantage of cash discounts?

b. Is the company collecting its accounts receivable more rapidly over time?

c. Is the company's investment in accounts receivable decreasing?

d. Are dollars invested in inventory increasing?

e. Is the company's investment in plant assets increasing?

f. Is the owner's investment becoming more profitable?

g. Is the company using its assets efficiently?

h. Did the dollar amount of operating expenses decrease during the three-year period?

i. Are there differences in accounting methods that should be taken into account when making comparisons?

 j. Which corporation has made most effective use of financial leverage?

k. Of the firms, which seems riskiest in terms of its ability to pay short-term or long-term obligations?


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