dq 1 week 2

Financial analysts must evaluate the performance of the company and compare that

performance over time. One way to evaluate the financial performance of a company is to

calculate financial ratios. Ratios can be used to assess a company’s profitability, liquidity,

efficiency, and financial risk (leverage). Changes in these ratios over time can alert a financial

analyst to poor management or strong shareholder returns. For this discussion, you will

calculate some common financial ratios for your chosen publicly traded company.

Prepare:

Prior to beginning work on this discussion forum,

• Read Chapter 11 of the Essentials of finance.

o Specifically review the “A Closer Look” feature box in Section 11.3.

• Complete the Week 2 – Learning Activity.

• Make sure you have completed the Week 1 – Assignment 1.

Calculate:

• Calculate two ratios for your chosen company, according to your last name and the list

below. Using Appendix A from Week 1, calculate the ratios for your chosen company for

the two most recent years available in the financial statements.

o Last names P through R: Days sales outstanding and days inventory outstanding.

Need help with your calculations? Check out the videos included in this resource: Week 2

Discussion Help (Links to an external site.).

Write:

In your initial discussion forum post,

• Create a table within your discussion post that includes the following information:

o the financial data used to calculate each ratio in the 2 years for your chosen

company

o the last 2 years (clearly labeled)

o the calculations and the concluded ratio

▪ Need help making a table? Review the How So I Insert a Table Using the

New Rich Content Editor as a Student? (Links to an external site.)

o Explain what your two ratios measure.

o Attach your Appendix A (that you completed in Week 1) to your discussion post

so that other students can review your data and calculations.

Guided Response: Review several of your colleagues’ posts, and reply to at least two of your

peers by 11:59 p.m. on Day 7 of the week. You must respond to two classmates who have

calculated different ratios than you. In your written responses to your classmates, address the

following:

• Using the included Appendix A provided by your classmate, confirm the calculated ratios

or explain a correction to the calculated ratios in the initial post.

• Provide the calculations for one additional ratio for their company for the 2 most recent

years. Choose the ratio from the list of ratios for this discussion.

o Identify which ratio you are calculating, and provide the financial data used for

the ratio as well the concluded ratio.

• State whether or not you believe this additional ratio shows another financial strength

for the company or if it shows a weakness for the company.