Financial statement analysis and ratio calculation

Purpose

To evaluate your ability to analyze financial statements, interpret key financial ratios, assess operational performance, and provide data-driven business recommendations through comprehensive comparative analysis of public companies.

Associated Skills

· Financial statement analysis and ratio calculation

· Trend analysis and data interpretation

· Comparative business performance evaluation

· Strategic thinking and recommendation development

· Professional business report writing and presentation

· Critical assessment of operational strengths and weaknesses

· Data visualization and professional formatting

Instructions

In this assignment, you will conduct a financial analysis of two public companies selected from the list below. You will evaluate key financial ratios, trends, and operational strengths using three years of summarized financial data. Based on your findings, you will provide two recommendations per company to improve financial performance or operational efficiency.

Company Options (Choose Two)

· Apple Inc. (Technology)

· Walmart Inc. (Retail)

· Delta Air Lines (Transportation)

· Johnson & Johnson (Healthcare)

For each company you select, download the PDF version of the SEC 10-K by searching for the Name of Company Investor Relations SEC and follow the path to the SEC 10-K file for the two most recent years (this year, last year, and the previous year, as may be available). Download the PDF files for reference when completing this assignment.

Assignment Deliverables

1. Company Backgrounds (Approx. 1 page)

For each company, provide:

· Brief industry and business overview

· Key revenue sources

· Any major changes or events during the three-year period

· Initial observations on financial trends

2. Financial Ratio and Trend Analysis (Approx. 2–3 pages)

Choose five key financial ratios from the categories below and calculate them for each company across the three-year period:

Suggested Ratio Categories (choose 1–2 from each):

· Liquidity: Current Ratio, Quick Ratio

· Profitability: Net Profit Margin, Return on Equity (ROE)

· Efficiency: Asset Turnover, Inventory Turnover

· Leverage: Debt-to-Equity Ratio, Interest Coverage Ratio

For each ratio:

· Present a simple chart or table to show changes over time

· Briefly interpret the trend (Is it improving? Declining?)

· Compare the ratio performance between the two companies

3. Operational Insights (Approx. 1–1.5 pages)

· Identify one operational strength and one weakness for each company based on the ratio trends

· Briefly assess how these strengths/weaknesses affect decision-making, investor confidence, or growth potential

4. Recommendations (Approx. 1–1.5 pages)

Provide two specific recommendations per company. For each:

· Explain the rationale using your financial findings

· Describe the expected financial impact

· Mention any challenge the company might face in applying the recommendation

Submission Guidelines

· Format as a professional business report with section headers

· Use tables and simple visuals where helpful

· Include basic citations if external industry comparisons are used

· Final submission should be 5 to 7 double-spaced pages, not including title page or references

Submission Guidelines / Criteria for Success

· Analysis and Insight (40%): Quality of ratio interpretation, operational insights, and comparative observations

· Accuracy and Application (30%): Correct calculations and appropriate application of financial concepts

· Recommendations (20%): Clear, actionable, and supported by data

· Professional Writing (10%): Organization, clarity, formatting, and grammar

References

1. Financial Statement Analysis: A Practitioner’s Guide by Martin Fridson and Fernando Alvarez https://onlinelibrary.wiley.com/doi/book/10.1002/9781119457176

2. US SEC – Beginner’s Guide to Financial Statements

https://www.sec.gov/about/reports-publications/investorpubsbegfinstmtguide

3. IBISWorld Industry Reports

https://www.ibisworld.com/

4. SEC EDGAR Database

https://www.sec.gov/search-filings

5. Yahoo Finance

https://finance.yahoo.com/

6. Morningstar

https://support.microsoft.com/en-us/office/financial-functions-reference-5658d81e-6035-4f24-89c1-fbf124c2b1d8

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