# Assignment 1

**Paper , Order, or Assignment Requirements**

Library Research Assignment

Locate a publicly traded U.S. company of your choice. Then, calculate the following ratios for the company for 2014 and 2015:

• Liquidity Ratios

o Current ratio [current assets / current liabilities]

o Quick ratio [(current assets – inventory) / current liabilities]

• Asset Turnover Ratios

o Collection period [accounts receivable / average daily sales]

o Inventory turnover [cost of goods sold / ending inventory]

o Fixed asset turnover [sales / net fixed assets]

• Financial Leverage Ratios

o Debt-to-asset ratio [total liabilities / total assets]

o Debt-to-equity ratio [total liabilities / total stockholders’ equity]

o Times-interest-earned (TIE) ratio [EBIT / interest]

• Profitability Ratios

o Net profit margin [net income / sales]

o Return on assets (ROA) [net income / total assets]

o Return on equity (ROE) [net income / total stockholders’ equity]

• Market-Based Ratios

o Price-to-earnings (P/E) ratio [stock price / earnings per share]

o Price-to-book (P/B) ratio [market value of common stock / total stockholders’ equity]

You are now ready to interpret the ratios that you have calculated. If a ratio increased from 2014 to 2015, why do you think that it increased? Is it a good or bad sign that the ratio increased? Please explain.

If a ratio decreased from 2014 to 2015, why do you think that it decreased? Is it a good or bad sign that the ratio decreased? Please explain.

If a ratio was unchanged from 2014 to 2015, why do you think that it was unchanged? Is it a good or bad sign that the ratio was unchanged? Please explain.

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