Analyze real world companies based on the requirements listed below from the point of view of an analyst/investor. Submit a written report to Canvas by Week 7
Compare and evaluate Tesla and General Motors based on their financial statements. The financial statements of 2020 are available in Canvas. Use tables, charts or graphs to present numbers/ratios and provide your interpretation and analysis of the numbers. It is required that present financial information (numbers and ratios) for year 2020. You are encouraged to analyze firm performance based on multi-year information and trend.
- Assess the size and growth aspects of each company based on the following financial statement related items
- Size
- total assets and total revenue
- market cap
- Growth
- asset growth and revenue growth
- market to book ratio
- price to earnings ratio (P/E ratio)
- Use following ratios or financial statemen item to compare and analyze business performance.
- Profitability
- gross profit percentage (LO 5.6)
- return on assets (LO 1.6)
- return on common stockholders’ equity, earnings per share, and the price/earnings ratio (LO 13.7)
- Solvency
- debt ratio (LO 2.5)
- debt to equity (12.6)
- free cash flows
- Liquidity
- current ratio (LO 4.6)
- acid-test ratio (LO 8.5)
- Operating Efficiency
- inventory turnover, days’ sales in inventory (LO 6.6)
- accounts receivable turnover ratio, and days’ sales in receivables (LO 8.5)
- asset turnover ratio (LO 9.6)
Formulas
| Firm Size | |
| Total Assets or Total Revenues, or Market Cap | |
| Growth Aspects | |
| Asset Growth | (Assets t – Assets t-1)/Assets t-1 |
| Sales Growth | (Sales t – Sales t-1)/Sales t-1 |
| Market to Book | Market Value of Equity/ Book value of Equity |
| Price Earnings Ratio (P/E) | Market Price Per Share/Earnings Per Share |
| Profitability Ratio | |
| Gross Profit percentage | Gross Profit/Net Sales |
| Return on Assets | Net Income/Average Total Assets |
| Return on Equity | (Net Income – Preferred Dividends)/Average Common Stockholder’s Equity |
| Liquidity Ratio | |
| Current Ratio | Current Assets/Current Liabilities |
| Acid-test Ratio (Quick Ratio) | (Cash + Short Term Investments + Accounts Receivable)/Current Liabilities |
| Solvency Ratio | |
| Debt to Asset | Total Liabilities/Total Assets |
| Debt to Equity | Total Liabilities/Total Equity |
| Free Cash Flows | Cash Provided by Operating Activities – Capital Expenditures – Cash Dividends |
| Activity Ratio | |
| Inventory Turnover | Cost of Goods Sold/Average Inventory |
| Days in Inventory | 365/Inventory Turnover Ratio |
| Accounts Receivable Turnover | Net Credit Sales/Average Accounts Receivable |
| Days in Collection | 365/Accounts Receivable Turnover |
| Asset Turnover Ratio | Net Sales/Average Total Assets |
