The purpose of this paper is to help you glean important competitive information from a company’s financial
statements in your chosen industry. You will read the financial statements, calculate ratios, analyze your
findings, and draw some conclusions based on your analysis.
Write a 4-5 page paper using a business in your chosen industry from which you can get the balance sheet,
income statement, and cash flow statement. All publicly traded companies must publish their financial
statements. If you cannot find a publicly traded company in your industry, and you have no access to financial
statements from a privately held company, broaden the scope of your industry and choose a publicly tradedbusiness that is similar in some ways to the one you wanted to research.
Begin your paper with an introduction
Explain which company you are analyzing, in what industry this company belongs, and why you chose this
one. Explain that this paper will use financial statements and ratios to create a financial analysis.
Use section headings throughout the rest of the paper as indicated:
Key financial information
For each of the following terms, look on the most recent annual financial statement of your company where the
requested term is found, state the amount and the amount from one year prior. Write two or three sentences
about the numbers, whether they increased or decreased, and what that tells you about the company.
Net Profit or Loss
Review the classification of ratios in Chapter 3. Choose three ratios that would be important for analyzing a
company in your industry and say why. Give a brief definition of each of the three ratios you chose, and explain
how the ratio is calculated (e.g. “divide the cost of goods sold, found on the income statement, by the inventory,
found on the balance sheet”). Calculate in your paper each of the three ratios using the financial statements
you found for the company. Show your work. You should come up with a quotient (the answer to the division
problem) for each ratio that you can compare to the industry average.
In analyzing a company’s financial health, remember that you are providing an analysis for the investors or the
owners to see whether their investment is a good one. Compare your calculation of each ratio with the industry
average. If you cannot find an average for your industry, find 2 other similar businesses, calculate their ratios,
and average them. That can be used as your industry average. Discuss possible reasons for the variance,
whether higher or lower than yours. The notes section of the financial statements often shed light on increases
Using your ratios, discuss what you have learned about the company based on these ratios.
Numbers don’t tell the whole story. What other information would you want to know in order to complete your
analysis? Think about anything that could affect the company, from new competition moving in to changing
demographics, to the economic situation, new regulations or a change in insurance or even newly announced
potential acquisitions. Look for articles in the Wall Street Journal or another credible business publication that
would shed some light on these areas.
ConclusionBring a key point of each of your sections into the conclusion, showing how the ratios tie in with the key
financial information as well as the additional information you were able to find. Make your best
recommendation as to whether this company is worthy of investment. Make the conclusion robust and support
your recommendation. The conclusion is not a summary; it is a synthesis of the components of your analysis.
Please use and cite your textbook, the financial statements of the company you researched, and at least one
additional source, using correct APA format. This paper should be written exclusively in the third person.
Important note: Do not simply look online for a professional analysis of the company you chose. You must
demonstrate in your paper that you did your own analysis, thought critically about the story told by the
information, and drew your own conclusions.