50.1K

Verified Solution

Link Copied!

a$.$ Compare the common size balance sheet statements of each company. Explain and identify two major differences over time and$/$or between the companies using the common$-$size balance sheet statement analyses. You need to be provide at least two common$-$size percentages for each company in your comparison comments.

Explain why you picked these two items.

b$.$ Which company is more profitable? Discuss specifically which accounts impacted profitability. Provide at least two common$-$size percentages for each company in your comparison comments.

Which statement are you using to make your assessment on profitability?

Compare the percentage of profit margin ratio in your ratio analysis in #$3$ over the past $2$ years. Have there been changes in this ratio from the past year?

c$.$ Explain how the Return on Equity $($ROE$)$ has changed over time for each company?

Explain how the profit margin, asset turnover, and financial leverage impacted ROE for each company. Provide the amount of the ratios for each of the companies in your explanation. Include a discussion of changes in profit margin, asset turnover, and financial leverage.

Explain what each ratio is measuring. You need to identify the specific company ratios you computed in #$3.$

d$.$ Explain what liquidity means.

Which company is more liquid? Why? You must discuss the relevant ratio$($s$)$ that support your answer to this question from the work you completed in #$3.$

e$.$ Explain what solvency means.

Which company is more solvent? Why? You must discuss the relevant ratio$($s$)$ that support your answer to this question from the work you completed in #$3.$

Answer & Explanation Solved by verified expert

See Answer