Introduction: In this unit you are being exposed to the finance aspect of a business operation, specifically profitability. In general, the financial statements provide information about the operations of the business. The analysis of these statements help to guide managers to see how the business is performing relative to previous time frames as well as other competitors in the industry. Be sure to use the NLU library for your research (the topic of Profitability) and cite everything you reference (including the assigned article) in APA citation format at the end of your initial post. For this assignment you are being provided the Balance sheet and the Income statements (please see attached) for a business over a 2-year period.
Part 1: Utilizing the financial statements provided calculate and interpret each profitability ratios for 2 years. Be sure to provide details and examples to support your work.
Calculate and interpret the following 6 profitability ratios: ROE, Asset Turnover, ROS (also called profit margin on sales), ROA, EPS, and lastly P/E ratio. Be sure to provide details and examples to support your work.
For each ratio:
Define each ratio and explain what each ratio is and why it is important for a firm.
Calculate the following ratios for 2 years each: ROE, Asset Turnover, ROS (also called profit margin on sales), ROA, EPS, and P/E.
What can you say about the company’s profitability ratios that you’ve calculated? What story does it tell over the 2-year period? Is it improving or getting worse? How does it compare to the industry average provided on the spreadsheet?
What is the importance of a financing strategy to a company’s performance?
Why is it important for an organization to have a good cash flow as it relates to working
capital? Provide some examples to support your work.
Read the following: Finance: how do we raise funds, reward shareholders, and manage our assets (attached). Locate and read the article:Mankins. M., Harris, K., & Harding, D (2017). Strategy in the Age of Superbundant Capital Harvard Business Review, 95(2), 66-75
Locate and read the article: Mankins, M., Harris, K., & Harding, D. (2017). Strategy in the Age of Superabundant Capital. Harvard Business Review, 95(2), Locate and read the article: Mankins, M., Harris, K., & Harding, D. (2017). Strategy in the Age of Superabundant Capital. Harvard Business Review, 95(2), Locate and read the article: Mankins, M., Harris, K., & Harding, D. (2017). Strategy in the Age of Superabundant Capital. Harvard Business Review, 95(2),
Locate and read the article: Mankins, M., Harris, K., & Harding, D. (2017). Strategy in the Age of Superabundant Capital. Harvard Business Review, 95(2),
Locate and read the article: Mankins, M., Harris, K., & Harding, D. (2017). Strategy in the Age of Superabundant Capital. Harvard Business Review, 95(2),
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