Conduct a financial statement analysis of a publicly listed company of your choice and one of its main competitors.

Conduct a financial statement analysis of a publicly listed company of your choice and one of its main competitors.
Your goal is to assess the financial health of your selected company and how it compares
to its peer.
To obtain financial statement information, go to the website of your selected
company and download the most recent annual report, including the balance sheet and
income statement. Select one of the company’s main competitors and download the
respective annual report (balance sheet & income statement). In your analysis, follow the
below outline. For part 1), submit your calculations in an Excel file and for part 2),
submit your write-up in a Word file.
1) Calculations (4 points)
a. Common size statements: Do a common size balance sheet and common size
income statement for both companies.
b. Ratio analysis: For both companies, calculate the
? Liquidity ratios (current ratio, acid test ratio)
? Leverage ratios (debt ratio, interest coverage ratio, cash coverage ratio)
? Turnover ratios (inventory turnover, receivables turnover, total asset turnover)
? Profitability measures (net profit margin, ROA, ROE)
? Market value ratios (PE ratio, market to book value)
2) Write-up (6 points): BA303 – Business Finance
2
Your write-up should be at least 2 pages (size: 12, space: 1.5pt, excluding the questions)
covering the below questions.
a. With regard to the common size balance sheet and income statement, can you identify
any (potential) problems the company you selected may be facing? Why are these
problems a threat to the financial health of the company? Comparing the common
size statements of your company with its competitor, what is your selected company
doing better/worse than its competitor?
b. With regards to the liquidity, leverage, turnover and profitability ratios, can you
identify any problems for your company? If yes, elaborate why these are problems.
Compared to its competitor, what is your company doing better/worse?
c. With regards to potential problems identified in a and b, what strategies would you
recommend the company to pursue in order to improve its situation? Your answer
may cover marketing, supply chain, inventory, finance, operations, HRM or any other
strategies you consider appropriate.
d. With regard to the market value ratios, what can you conclude about the expectations
of stock market investors for your selected company and its competitor? If there are
any differences between the two companies, where could they come from? Finally,
looking back to your financial statement analysis overall, would you invest in this
company? Why/why not?