Question

You are a financial analyst for a large company in the Soap Industry. You have been provided with: Four years of annual Income statements and Balance sheets, for your company , Four years of annual Income statements and Balance sheets, for your major competitor Four years of Soap industry statistic on the Industry average financial ratios You have been tasked by your controller to prepare a financial ratio analysis to determine how Suds Inc.’ financial performance compares to (1) the major competitor and (2) the Soap Industry average

You are a financial analyst for “Suds Inc.” a large company in the Soap Industry. You have been provided with:

Four years of annual Income statements and Balance sheets, for your company ,

Four years of annual Income statements and Balance sheets, for your major competitor

Four years of Soap industry statistic on the Industry average financial ratios

You have been tasked by your controller to prepare a financial ratio analysis to determine how Suds Inc.’ financial performance compares to (1) the major competitor and (2) the Soap Industry average

Conference Assignment:

Prepare and post in the Week 2 conference a one paragraph outline stating (1) how you would proceed to conduct the comparative analysis (your process for analysis) and what the major results you hope to determine and present.

Answer 1

Will proceed with the following steps:

1) I will start with analyzing individual Income statement and Balance Sheet of the company.

2) Analyze and Understand the balance sheet of the competitors

3) Calculate following ratios for all the companies:

- Liquidity Ratios

-Solvency Ratios

- Profitability Ratios

- Efficiency Ratios

- Coverage Ratios

4) Perform common size and comparative analysis of our company with its own past performance and with that of the peers and Industry

5) Identify the ratios where our company is behind the competitors and peers and try to find out the reason behind the same

Major Results of the above process:

- We would be able to assess our companies performance and compare it with peers

- It will help us to know how are we fared in the industry, how is our market share changing

- It will also help us to forecast the future of our company.