This week, you’ll review a balance sheet and income statement, and then calculate common financial ratios to evaluate the company’s financial performance. These are simple formulas, but they may seem intimidating. In most instances, the calculations are simple and can be automated in spreadsheets. However, for this discussion, you’ll want to perform the calculations yourself.
Choose 1 financial ratio that you will need to calculate for this week’s assignment. Try to choose a ratio that has not been chosen by another student.
Choose 1 publicly traded company and review the most recent balance sheet and income statement for a company whose reports are posted on a website, such as Yahoo Finance.
Calculate the financial ratio you selected for the company you chose.
Respond to the following in a minimum of 175
- What is the ratio you chose? Explain what this ratio means.
- What were the results of your calculation? Show your work to the class, including the formula you used, the data you input for your calculation, and the company name in your response.
- What might you infer about the company’s financial performance as it relates to this ratio?
- Which other ratios might you find helpful to confirm what your original ratio calculation told you?