Prepare the price to earnings ratios

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Reference no: EM131093943

1. Balance Sheet -------- From the following balance sheet accounts,

a. Construct a balance sheet for 2013 and 2014.
b. List all the working capital accounts.
c. Find the net working capital for the years ending 2013 and 2014.
d. Calculate the change in net working capital for the year 2014.

Balance Sheet Accounts of Roman Corporation
Account	Balance 12/31/2013	Balance 12/31/2014
Accumulated depreciation	$2,020	$2,670
Accounts payable	$1,800	$2,060
Accounts receivable	$2,480	$2,690
Cash	$1,300	$1,090
Common stock	$4,990	$4,990
Inventory	$5,800	$6,030
Long-term debt	$7,800	$8,200
Plant, property, and equipment	$8,400	$9,200
Retained earnings	$1,370	$1,090

Research two companies' financial statements from the following industries:

• Airline
• Oil/gas

Analyze below table in Financial Management: Core Concepts, Ch. 14: "Financial Ratios: Industry Averages." (Table is below)

Prepare the following ratios for the two sets of financial statements in Microsoft Excel:

• Price to Earnings
• Gross Margin

Table Financial Ratios: Industry Averages

Ratio or Account	Airlines	Auto	Pharmaceuticals	Oil and Gas	Retail	Computer Hardware
P/E ratio	22.44	7.38	87.80	5.39	34.29	20.97
Gross margin	19.28%	21.77%	59.54%	47.47%	24.51%	43.54%
Profit margin	0.75%	3.79%	14.85%	12.14%	2.94%	17.08%
Current ratio	0.92	0.32	2.77	1.11	1.23	2.86
Debt-to-equity ratio	1.69	0.34	0.11	0.19	0.81	0.19
Return on assets	0.70%	3.57%	9.40%	12.11%	6.31%	18.22%
Return on equity	0.77%	10.17%	14.71%	20.10%	16.82%	26.24%

Reference no: EM131093943

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