WA7
Please read and watch first
Heisinger, K., & Hoyle, J. B. (n.d.). Accounting for Managers. https://2012books.lardbucket.org/books/accounting-for-managers/index.html
Chapter 13 – How Do Managers use Financial and Nonfinancial Performance Measures?
Read the following sections:
Chapter Introduction
Trend Analysis of Financial Statements
Common-Size Analysis of Financial Statements
Ratio Analysis of Financial Statements
Wrap-Up of Chapter Example
This text explains the purposes of trend and ratio analyses. It introduces the key profitability, liquidity, and market valuation measures and illustrates these as well as trend analyses with applied examples.
Optional Video
1. The Finance Storyteller. (2019, January 290). Financial Ratio Analysis. [Video]. YouTube.
Submit a paper which is 2.5 pages and 4 reference page.
Please describe the circumstances of the following case study and recommend which company to purchase. Explain your approach to the problem, perform relevant calculations and analyses, and justify your recommendation. Ensure your work and conclusions are thoroughly supported.
Case Study:
You work in the mergers and acquisitions department of a large conglomerate who is looking to invest in a retail business. Two companies, Fashion Forward and Dream Designs, are the final two options being considered. You have the most recent available (PLEASE SEE ATTACHED) or each company.
Compute the following ratios for each company:
Profit Margin Ratio
Return on Assets
Current Ratio
Quick Ratio
AR Turnover Ratio
Average Collection Period
Inventory Turnover Ratio
Average Sales Period
Debt to Equity Ratio
For this assignment:
Compute all required amounts and explain how the computations were performed
Evaluate the results for each company and explain what each ratio means
Compare and contrast the companies.
Based on your analysis:
recommend which company the organization should pursue
Thoroughly support your conclusion, including what other factors should be considered
Be specific.
Superior papers will:
Perform all calculations correctly.
Articulate how the calculations were performed.
Evaluate the ratios computed and explain the meaning of the ratios.
Compare the companies.
Recommend which company to pursue, supported by well-thought-out rationale and considering any other factors that could impact the recommendation.
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