Computing Profit Margin Ratio for A Company

Computing Profit Margin Ratio for A Company

Instructions/Descriptions

Computing Profit Margin Ratio for A Company

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1. DISCUSSION ASSIGNMENT

Your Discussion should be a minimum of 250 words in length and not more than 450 words. Please include a word count. Following the APA standard, use references and in-text citations for the textbook and any other sources.

In the second week, you selected a manufacturing company and described its products and costs. (Apple Inc.) For this week, refer back to that company and perform a trend analysis for the most recent 4 years (the financial statements needed for this assignment may be available at https://finance.yahoo.com/). Analyze the trends for 3-line items you believe are most important in evaluating a company for the balance sheet and for the income statement (3 each). In your initial post, answer the following questions:

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• What do you observe in the linear trends (i.e., are values increasing or decreasing)?
• What are the trends on a common-size basis?
• What would be your next steps in completing a thorough analysis of the trends?

2. WRITTEN ASSIGNMENT

Submit a paper which is 2-3 pages in length (no more than 4-pages), exclusive of the reference page. Paper should be double spaced in Times New Roman (or its equivalent) font which is no greater than 12 points in size. The paper should cite at least three sources in APA format.  One source can be your textbook. Always include conclusion.

Please describe the circumstances of the following case study and recommend which company to purchase. Explain your approach to the problem, perform relevant calculations and analyses, and justify your recommendation. Ensure your work and conclusions are thoroughly supported.

Case Study:

You work in the mergers and acquisitions department of a large conglomerate who is looking to invest in a retail business. Two companies, Fashion Forward and Dream Designs, are the final two options being considered. You have the most recent available   income statements and two years of balance sheets  for each company. (Please see attached excel).

Compute the following ratios for each company:

• Profit Margin Ratio
• Return on Assets
• Current Ratio
• Quick Ratio
• AR Turnover Ratio
• Average Collection Period
• Inventory Turnover Ratio
• Average Sales Period
• Debt to Equity Ratio

For this assignment:

• Compute all required amounts and explain how the computations were performed
• Evaluate the results for each company and explain what each ratio means
• Compare and contrast the companies.
• Based on your analysis:
• recommend which company the organization should pursue
• Thoroughly support your conclusion, including what other factors should be considered
• Be specific.

Superior papers will:

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• Perform all calculations correctly.
• Articulate how the calculations were performed.
• Evaluate the ratios computed and explain the meaning of the ratios.
• Compare the companies.
• Recommend which company to pursue, supported by well-thought-out rationale and considering any other factors that could impact the recommendation.

Be sure to use APA formatting in your paper.  Purdue University’s Online Writing LAB (OWL) is a free website that provides excellent information and resources for understanding and using the APA format and style. The OWL website can be accessed here:  http://owl.english.purdue.edu/owl/resource/560/01/

3. PORTFOLIO ASSIGNMENT

We have covered several ratios in this unit that users of financial statements can work with to evaluate a company’s performance. However, not all ratios are important for or applicable to all organizations. In particular, service organizations have different business models than manufacturing organizations. Using the company you worked with for your Unit 2 portfolio assignment (Apple Inc), explain which financial ratios would be applicable to the company and which would not. State the reasons for your assertions.

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As portfolio activities are to be self-reflective, please make sure to connect the portfolio assignment to:

• Your personal experiences. Reflect on how this assignment topic is applicable to and will benefit you.
• Course readings and any external readings.
• Discussion forum posts or other course objectives.
• The Portfolio Activity entry should be a minimum of 500 words and not more than 750 words. Use APA citations and references if you use ideas from the readings or other sources.
  

  Computing Profit Margin Ratio for A Company

  

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