Financial Statement Review
Download the annual reports for the last two fiscal years of the publicly-traded company you selected in week one. Review this weekâ€™s readings on financial statement analysis in the text, and substitute the financial statements of your company and address the following:
- Use the last two fiscal years financial statements of the publicly-traded company you selected and calculate the following financial ratios:
- Calculate the profit margin (net income/net sales) and asset turnover (net sales/total assets) to compute the return on assets (ROA). Now introduce the equity multiplier (total assets/total equity) to find the return on equity (ROE).
- On the basis of your calculations, describe how each of the three components (profit margin, asset turnover, and leverage) contributed to the change in your companyâ€™s ROA and ROE. Which component(s) contributed the most to the change in ROA? Which contributed the most to the change in ROE?
- Explain if these changes are fundamentally healthy for the company.
Your paper should be three- to five- pages in length (excluding the title and reference pages) and formatted according to APA style