In this milestone, submit a draft of a portion of the analysis step (Part II), S

Question

In this milestone, submit a draft of a portion of the analysis step (Part II), Section C: Key Ratios. You will calculate and explain the significance of key ratios for the company.

Calculate the ratios over the last three reporting years and show your calculations for the following indicators in an appendix: profitability, liquidity, debt, operating performance, cash flow, and investment valuation ratios. Then explain the significance of each ratio

In other words, what do the ratios suggest for informing decisions to buy or sell company shares or change management procedures?

Use this section to present your findings, based on quantitative and qualitative analysis of the financial statements. Include a copy of the financial statements and any ratios or analysis in an appendix as support for your text. In particular, this section should cover:

c)Key Ratios

. Use this section to discuss key performance indicators (ratios). Be sure to show your calculations for each indicator

in an appendix.

Specifically, you must look at:

1.

Profitability

: Accurately present and explain the significance of the profit margin, return on assets, return on equity, and return on capital ratios for this company. In other words, what are the ratio values for this company, and what do they suggest for informing decisions to buy or sell company shares or change management procedures?

2.

Liquidity

: Accurately present and explain the significance of the current, quick, and cash ratios for this company. In other words, what are the ratio values for this company, and what do they suggest for informing decisions to buy or sell company shares or change management procedures?

3.

Debt

:

Accurately present and explain the significance of debt, debt-equity, and interest coverage ratios for this company. In other words, what are the ratio values for the company, and what do they suggest for informing decisions to buy or sell company shares or change management procedures?

4.

Operating performance

: Accurately present and explain the significance of the fixed-asset turnover ratio for this company. In other words, what is the ratio value for this company, and what does it suggest for informing decisions to buy or sell company shares or change management procedures?

5.

Cash flow

:

Accurately present and explain the significance of the dividends payout ratio for this company. In other words, what is the ratio value for this company, and what does it suggest for informing decisions to buy or sell company shares or change management procedures?

6.

Investment valuation

:

Accurately present and explain the significance of the price/book value, price/earnings, price/sales, and dividend yield ratios for this company. In other words, what are the ratio values for this company, and what do they suggest for informing decisions to buy or sell company shares or change management procedures?

Please copy and paste the following to access Google finace

Income Statement Annual

https://www.google.com/finance?q=NYSE%3AF&fstype=ii&ei=GVZwV4HhM4iEsAGTq5WoBA

Balance Sheet

https://www.google.com/finance?q=NYSE%3AF&fstype=ii&ei=GVZwV4HhM4iEsAGTq5WoBA

Cash Flow

https://www.google.com/finance?q=NYSE%3AF&fstype=ii&ei=GVZwV4HhM4iEsAGTq5WoBA

Thank you very much for the help

Explanation / Answer

1. Profitability Ratios:

Profit Margin: Profit Margin can be defined as the net income for each dollar of total revenue earned. Profit Margin is usually expressed as percentage. Appendix has the Profit Margin for 2013-15 for the given company.

Return on Assets (ROA): ROA is a measure of profitability of a company relative to its total assets. It is an indicator of efficiency of management to use the company assets to generate earnings. Appendix has the ROA for 2013-15 for the given company.

Return on Equity (ROE): ROE is a measure of the income generated by the company for each dollar of shareholder equity.Appendix has the ROE for 2013-15 for the given company.

Return on Capital (ROC): ROC is a measure of the efficiency of capital invested to generate profitability.Appendix has the ROC for 2013-15 for the given company.

2. Liquidity Ratios:

Current Ratio: It is a measure of ability of a company to pay its short liabilities using current assets. Appendix has the Current ratio for 2013-15 for the given company.

Quick Ratio: It is a measure of a comany's liquidity to meet its short term obligtaions using the most liquid assets.Appendix has the Quick ratio for 2013-15 for the given company.

Cash Ratio: It is a company's ratio of Cash and Cash equivalents to its current liabilities. Appendix has the Cash ratio for 2013-15 for the given company.

3. Debt Ratios

Interest Coverage Ratio: It is a measure of ease of a company to pay the interest on its outstanding debt. Appendix has the Interest coverage ratio for 2013-15 for the given company. For the given company the interest expense is not shown in the given data.

4. Operating Performance Ratio

Fixed Asset Turnover Ratio: It is ameasure of company's operating performance. It is a measure of how efficiently company is able to produce net revenue from its fixed assets. Appendix has the Fixed Asset Turnover ratio for 2013-15 for the given company.

Appendix

Key Ratios

Income Statement

Balance Sheet

Cash Flow Statement

2015 2014 2013 Profitability Ratios Formula Profit Margin = Net Income / Net Revenue 6.9% 0.9% 9.8% Return on assets =Net Income / Total Assets 4.6% 0.6% 7.1% Return on equity =Net Income / Shareholders Equity 4.6% 0.6% 7.1% Return on capital = Earnings Before Interest and Tax (EBIT) / Capital Employed 142.5% 16.5% 217.8% Liquidity Ratios Current = Current Assets / Current Liabilities 0.61 0.50 0.72 Quick = (Current Assets – Inventories) / Current Liabilities 0.43 0.32 0.53 Cash = Cash & Cash Equivalents / Current Liabilities 0.31 0.25 0.36 Debt Ratios Interest coverage ratio = EBIT/Interest Expense Missing Interest Expense for 2013-15 Operating performance Ratio Fixed-asset turnover =Net Revenue/ Net Property & Equipment 2.60 2.43 2.49

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