Reference no: EM133178621

Question - An investor has approached you about whether purchasing stock in the company would be a wise investment. Using your financial analysis of one of the approved companies, you will send a letter to the investor summarizing your findings and explaining whether or not you recommend a stock purchase at this time. Refer to Gap, inc "Annual Reports for 2022 . the information in the Form 10-K . Using the correct formulas and a separate tab for each analysis, calculate the following ratios using Microsoft Excel:

1. Three liquidity ratios for the past 2 years 2022-2021

2. Three solvency ratios for the past 2 years

3. Three profitability ratios for the past 2 years

In addition, use Gap, inc and Abercrombie and Fitch within the same industry to conduct research about a competitor company. Using IBIS World or another applicable resource, locate three ratios for the competitor company. Compare your company to the competitor company and indicate the differences in the ratios for the two organizations. Next, locate the same three ratios for the industry. Compare your company to the industry average and discuss how well it is performing compared to the industry. Note: you are not required to calculate the ratios for this portion of the assignment, but proper citations are required for the ratios used in the comparison. Justify your analysis by explaining your findings.

Using your research findings and analysis of company performance in relation to industry competitors, stock purchase recommendations for a potential investor. In the letter, address the following, referencing specific ratios and comparative numbers as appropriate:

1. Discuss the overall financial performance of your company in relation to the specific competitor.

2. Discuss whether the company performed better or worse than the industry average, providing specific numbers and an explanation of what the numbers illustrate. For this portion of the memo, consider the 21 questions in Chapter 6 of the textbook to explain what the ratio results tell the user of the financial statements about the health of the company. Instead of providing calculations or showing numerical comparison(s), describe the performance of the company and use the ratio results to support your points.

3. Recommend whether the potential investor should purchase stock in your company and justify your recommendation based upon your research and analysis of the company ratios and industry competition.