Resource: Financial Statements for Avis Budget Group.
Review the assigned company’s financial statements from the past three years.
Calculate the financial ratios for the assigned company’s financial statements, and then interpret those
results against company historical data as well as industry benchmarks:
•Compare the financial ratios with each of the preceding 4 years 2010, 2011, 2012, 2013
Using the below 14 ratios for each of the 4 years explain
changes from year to year
Explain trends in four categories
+liquidity
+Efficiency
+leverage
+profitability
•Compare the calculated financial ratios against the industry benchmarks for the industry.
Write a 500 to 750 word summary of your analysis.
Show financial calculations where appropriate.
Formulas –
1. Return on Equity (ROE) = Net Income ÷ Total Equity
2. Price-earnings Ratio = Price per Share ÷ Earnings per Share
3. Market-to-book ratio = Market Value of Equity per Share ÷ Book Value of Equity per Share
4. Total Debt Ratio = Total Debt ÷ Total Assets
5. Debt to Equity Ratio = Total Debt ÷ Total Equity
6. Times Interest Earned = EBIT ÷ Interest Expense
7. Net Profit Margin = Net Income ÷ Net Sales
8. Return on Assets (ROA) = Net Income ÷ Total Assets
9. Current Ratio = Current Assets ÷ Current Liabilities
10. Quick Ratio = (Current Assets – Inventory) ÷ Current Liabilities
11. Inventory Turnover = Cost of Goods Sold (COGS) ÷ Inventory
12. Total Asset Turnover = Net Sales ÷ Total Assets
13. Day’s Sales in Inventory = 365 days ÷ Inventory
14. Day’s Sales Outstanding = 365 days ÷ Accounts Receivable Turnover