Accounting and Financial Analysis
Analyze the financial health of two competitors using the provided Excel spreadsheet template. The competitors are Lockheed Martin Corporation and Northrop Grumman Corporation.
RATIO
ANALYSIS
| RATIO ANALYSIS | |||
| Note: Please change the column names based on your industry and your selected companies. | |||
| RATIOS | |||
| Profitability Ratios (%) | |||
| Gross Margin | |||
| EBITD Margin | |||
| Operating Margin | |||
| Pretax Margin | |||
| Effective Tax Rate | |||
| Financial Strength | |||
| Quick Ratio | |||
| Current Ratio | |||
| LT Debt to Equity | |||
| Total Debt to Equity | |||
| Interest Coverage | |||
| Valuation Ratios | |||
| P/E Ratio | |||
| Price to Sales (P/S) | |||
| Price to Book (P/B) | |||
| Price to Tangible Book | |||
| Price to Cash Flow | |||
| Price to Free Cash Flow | |||
| Management Effectiveness (%) | |||
| Return On Assets | |||
| Return On Investment | |||
| Return On Equity | |||
| Dividends | |||
| Dividend Yield | |||
| Payout Ratio | |||
| Efficiency | |||
| Revenue/Employee | |||
| Net Income/Employee | |||
| Receivable Turnover | |||
| Inventory Turnover | |||
| Asset Turnover | |||
| Summary | |||
| What is ratio analysis? Briefly explain in this space, and reference your resources: | |||
| Referring to your ratio analysis above, in which company would you be willing to invest, and why? |
MBA 520 Module Two Activity Guidelines and Rubric
Overview: For this task, you will analyze the financial health of two competitors in the same industry based on their ratios, using the provided Excel spreadsheet
template. Then, you will complete your analysis by writing a short synopsis of your findings in the space below the analysis.
Prompt: Follow the steps below to analyze the financial health of two competitors. Use the Module Two Activity Template to complete this task.
Select two companies operating in the same industry (for example, Macy’s and Dillard’s). The companies have to be in the same business for the ratios to be
valuable to your analysis. Then, complete the template, providing the following:
Ratio Research: Use the template to analyze the selected ratios (profitability, financial strength, valuation, management effectiveness, dividends, and
efficiency) for both of the competitors. To complete this part, you can reference the Morningstar website in the Module Two resources to obtain the
ratios. You can also use the SEC EDGAR Company Filings resource from Module One to obtain the ratio from annual reports. Please note: The ratios have
to be from the same time period (the same year for both competitors). For training on how to use Excel, visit the Hoonuit training site or search YouTube
to find appropriate Excel training videos.
Industry Ratios: To analyze ratios for the companies, you also need to obtain the ratios for the industry that the competitors operate in. Industry values
for the ratios can be found in the index column. If no index value is available, put the five-year averages for both companies in the industry column and
use these figures for the industry comparison of your ratio analysis.
Ratio Analysis: Compare the two companies based on their ratios. Use the last column in the template to write in detail how each company is doing
based on the ratios. Compare the company ratios to the industry and each other.
Summary: This short write-up should be done directly in your Excel spreadsheet.
o What is a ratio analysis? Briefly explain in about one paragraph. Please quote your resource.
o Referring to the ratio analysis, in which company would you be willing to invest and why?
Note: This is a theoretical exercise. You should not be investing according to this analysis.
Rubric
Guidelines for Submission: Complete and submit the Excel Worksheet template provided.
https://learn.snhu.edu/d2l/lor/viewer/view.d2l?ou=6606&loIdentId=21532
http://www.morningstar.com/analyst-research/stock-reports.aspx
https://www.sec.gov/edgar/searchedgar/companysearch.html
https://www.atomiclearning.com/login/snhu
Critical Elements Exemplary Proficient Needs Improvement Not Evident Value
Ratio Research Provides accurate data for all the
required ratios in the categories of
profitability, financial strength,
valuation, management
effectiveness, dividends, and
efficiency (100%)
Provides data for ratios in the
categories of profitability, financial
strength, valuation, management
effectiveness, dividends, and
efficiency, but some of the data is
missing or inaccurate (70%)
Does not provide data for any
of the required ratios in the
categories of profitability,
financial strength, valuation,
management effectiveness,
dividends and efficiency (0%)
10
Industry Ratios Provides accurate data for all the
industry ratios in the categories of
profitability, financial strength,
valuation, management
effectiveness, dividends, and
efficiency (100%)
Provides data for the industry ratios in
the categories of profitability, financial
strength, valuation, management
effectiveness, dividends, and
efficiency, but some of the ratios are
missing or inaccurate (70%)
Does not provide data for any
of the industry ratios in the
categories of profitability,
financial strength, valuation,
management effectiveness,
dividends and efficiency (0%)
10
Ratio Analysis Provides a detailed analysis for
each ratio that demonstrates a
keen understanding of each
company’s position when they
are compared to each other
and the industry (100%)
Provides a detailed analysis for
each ratio that demonstrates an
accurate understanding of each
company’s position when they are
compared to each other and the
industry (90%)
Provides an analysis for each ratio, but
the analysis is incomplete or
demonstrates an inaccurate
understanding of each company’s
position when they are compared to
each other and the industry, or lacks
detail (70%)
Does not provide a ratio
analysis (0%)
35
Summary Provides an accurate and
complete definition of ratio
analysis, as well as a through
and particularly cogent and
detailed explanation of which
company they would invest in
and why that choice is
supported by the financial data
(100%)
Provides an accurate and complete
definition of ratio analysis, as well
as a complete, appropriate, and
detailed explanation of which
company they would invest in and
why that choice is supported by
the financial data (90%)
Provides a definition of ratio analysis
and an explanation of which
investment they would choose and
why, but the definition is inaccurate or
incomplete, or the explanation of
which investment they would choose
and why is incomplete or inaccurate
and not supported by the financial
data, or submission lacks detail (70%)
Does not provide a definition
of financial analysis or a
selected investment and
explanation (0%)
35
Articulation of
Response
Submission is free of errors
related to citations, grammar,
spelling, syntax, and
organization and is presented in
a professional and easy-to-read
format (100%)
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
(90%)
Submission has major errors related to
citations, grammar, spelling, syntax, or
organization that negatively impact
readability and articulation of main
ideas (70%)
Submission has critical errors
related to citations, grammar,
spelling, syntax, or
organization that prevent
understanding of ideas (0%)
10
Total 100%