Corporate Financial Ratios – (5%) Week 10 (November 9, 2022)
a) Use the key financial ratios to evaluate the financial performance for one publicly traded company whose headquarters is located in a non-OECD country and of at least one of its competitors whose headquarters is located in an OECD country: (https://www.oecd.org/).
b) The non-OECD firm must come from a country other than India.
c) The two firms must be in the same general industry. You can’t really compare a clothing retailer and an automobile manufacturer.
d) Evaluate the performance of the company when compared with itself over entire financial year periods (trend analysis or time-series analysis);
e) Evaluate the performance of the company when compared with its competitor (cross-sectional analysis);
f) Based on tasks a) and d), make an assessment of the company’s commercial risks.
g) Explain why you picked the ratios you used and why these ratios are the most informative;
h) Do not pick financial institutions such as banks or insurance companies. (Their accounting is just plain odd.)
i) Only one (1) student may select each company. First come, first served.
One of the critical tasks in business is to determine what is important for your suppliers and/or customers. Once you know this, or make a good educated "guess", you know how to proceed. If a supplier does not have much cash on-hand, then it might accept a lower price in exchange for fast payment. If the customer has irregular and unpredictable sales patterns, then having inventory on hand is key to meeting the customer’s need but paying for it up front may be very difficult for the firm. If a firm is dealing with least developed countries, either buying or selling, then security of payment might be a critical issue.
Sample Solution