Prepare common size analysis for two companies

Assignment Help Financial Accounting

Reference no: EM133589568

Homework: Industrial Comparative Analysis- Financial Statement Analysis

You should prepare your answers with the objective of applying all the knowledge learned in class that corresponds to the course content. You should demonstrate thorough understanding of finance concepts and principles. The students' work will be assessed by depth of analysis, solid judgments, logic of statements, and understanding of implications of finance and business. For calculations, you should show all your workings and the results.

Learning Outcomes

I. Outcome I: Develop a deep understanding on how to compare companies in similar industries and form opinions as to the relative strength of one company versus another supporting these opinions with financial data.

II. Outcome II: Develop a deep knowledge of financial ratios used for evaluating companies.

III. Outcome III: Demonstrate a deep understanding of the tools of analysis in financial statement analysis. Outcome 4: Compare and contrast information about enterprises with relevant benchmarks.

Task:

You need to select the main competitor for the company that you used for Homework. Then you should prepare a report and presentation on the following five tasks, using two annual reports for year 2022, for the company of your choice and its competitor.

Question I. Introduction: Explain briefly the similarities and differences between your company and its competitor with focus on business activities.

Question II. Income Statement: Prepare common size analysis for two companies. Compare the composition of their costs, operating expenses, EBIT and net income. Compare their dividend payout and retention ratios.

Question III. Balance Sheet: Prepare common size analysis for two companies. Compare the composition of their Assets (what part is Current Assets and what part is Non-Current Assets). Also compare their inventories, accounts receivable and accounts payable, short-term debt and long-term debt. Compare the capital structures of two companies.

Question IV. Ratio Analysis: compare two companies in terms of liquidity, profitability, leverage and efficiency. Make meaningful conclusions related to the ratio results. Explain which company performs better in every area.

Question V. Research the industry performance in year 2022 and summarize the main tendencies. Relate the companies' performance to the industry trends. Highlight strong and weak points for each company and suggest improvements. Explain how you see the leading company in this industry in the future.

Note that all comparisons should be performed in relative terms (i.e., percentages, ratios, etc.) and not in absolute (monetary) terms.

Reference no: EM133589568

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