Accounting

Course Project Guidelines

Class, you have been assigned to conduct a financial analysis report on two companies that are

in the same industry (e.g. Walmart, Target). You will need to download the most recent annual

report and be able to compose a written report and compute selected ratios that will help with

your investment decision. Suggestion: Visit the company website and find the investor relations

section or you can visit www.yahoofinance.com or other financial websites.

Your report should include the following information:

A. A History of the two organizations. (Be sure to include when they incorporated and

describe their history when they first began to where they are currently.

B. Products or services that they are currently in the market.

C. Any major events regarding the organization (e.g. restructurings, mergers or

acquisitions, lawsuits, bankruptcies)

D. Be able to compute the following ratios for the last two years:

• Current Ratio

• Quick (Acid-Test) Ratio

• Inventory Turnover

• Days Sales’ In Inventory

• Accounts Receivable Turnover

• Days’ Sales in Receivables

• Accounts Payable Turnover

• Days Payable Outstanding

• Debt Ratio

• Times-Interest-Earned Ratio

• Gross Margin Percentage

• Net Profit Margin

• Rate of Return on Net Sales

• Rate of Return on Total Assets

• Rate of Return on Common Stockholders’ Equity

• Earnings Per Share

• Price-Earnings Ratio

• Dividend Yield

• Book Value Per Share of Common Stock

After computing the ratios, please compose your analysis of the two organizations by

evaluating them based on the following criteria:

A. Ability to pay current liabilities

B. Measuring turnover and their cash conversion cycle.

C. Ability to pay long-term debts (Liabilities)

D. Measuring profitability

E. Analyzing their stock as an investment.

After completing those tasks, please write your conclusion and make your determination as to

which organization you would prefer to invest in and cite three key reasons as to why you made

such a decision.