PART II: Financial Analysis of Company’s Past and Present Performance

1. Prepare all the financial measures using financial data for the last three historical years in the company statements. 

a. Gross Profit/Operating Profit as a % or Revenues

b. Net Income as a % of Revenues

c. Earnings per Share (EPS)

d. Effective Tax Rate (ETR)

e. Return on equity (ROE)

f. Return on assets (ROA)

g. Profitability and Productivity of ROA

i. Profit Margin

ii. Asset Turnover

h. Net Operating Profit After Taxes (NOPAT)

i. Net Operating Assets (NOA)

j. Return on Net Operating Assets (RNOA)

i. Net Operating Profit Margin (NOPM)

ii. Net Operating Asset Turnover (NOAT)

k. Net Non-operating Expense (NNE)

l. NNO Net Non-operating Obligations (NNO)

m. Financial Leverage (FLEV)

n. Spread 

o. Non-operating Return

p. Working Capital

q. Credit risk ratios

i. Times interest 

ii. EDITDA coverage

iii. Cash from Operations to Total Debt

iv. Current ratio

v. Quick ratio

vi. Debt to equity ratio

r. Accounts receivable (A/R) turnover (ART)

s. Average sales outstanding

t. Accounts payable (A/P) turnover) (APT)

u. A/P days outstanding

v. Free cash flow (FCF)

As part of your ratio analysis you will be required to segregate your income statement and balance sheet between Operating and Non-operating items.  Show your work by highlighting the accounts on your finance statements that are Operating and Non-operating.  For the balance sheet, create a separate Net Operating Asset (NOA) balance sheet in a schedule within your file.

2. For each financial measure, prepare a comparison across historical years and to your industry standards and financial norms.  Discuss in your comparison what the ratio tells an analyst in general terms and reflects about your specific company. Based on your company’s ratios, describe any actions that could be taken to address improved performance, if warranted.