Liquidity ratios
Current ratio
Acid-test, or quick, ratio
Receivables turnover
Inventory turnover (you would need to select a company that sells inventory for this purpose)
Profitability ratios
Asset turnover
Profit margin
Return on assets
Return on common stockholders equity
Solvency ratios
Debt to total assets
Times interest earned
Show your calculations for each ratio. Explain what the ratio results mean. For example, if you calculate inventory turns and your number is 6, please interpret this number (this means that inventory is turned six times a year (or that it takes around 60 days to sell inventory items). Simply providing a number without interpreting what that number means is not enough.
Create a horizontal and vertical analysis for the balance sheet and the income statement.
Write a 700- to 1,050-word memo to the CEO of your selected organization in which you discuss your findings from your ratio calculations and your horizontal and vertical analysis. In your memo, address the following questions:
What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company?
Which users may be interested in each type of ratio?
What does the collected data reveal about the performance and position of the company?
Formatyour memo consistent with APA guidelines. Use Times New Roman 12 pt double-spaced. Ensure that you present your analysis in a format so that I can readily see all the results (a table would be the best approach). Note that these results would not be considered toward the memo word count.
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