Locate a publicly traded U.S. company of your choice. Then, calculate the following ratios for the company for 2012 and 2013:

Locate a publicly traded U.S. company of your choice. Then, calculate the following ratios for the company for 2012 and 2013:

·         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 2012 to 2013, 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 2012 to 2013, 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 2012 to 2013, why do you think that it was unchanged? Is it a good or bad sign that the ratio was unchanged? Please explain.