FIN 550_Worksheet_IO
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RATIO ANALYSIS Note: change the column names to your industry and selected companies
RATIOS
Home Improvement
Lowe's
Gross Margin 34.31%
33.30%
EBITDA Margin 16.27%
13.82%
Operating Margin 14.10%
12.76%
Pre-Tax Margin 13.59%
11.75%
Effective Tax Rate 24.78%
Financial Strength
Quick Ratio
0.14
0.17
Current Ratio 1.28
1.13
LT Debt to Equity Total Debt to Equity 0.17
Interest Coverage 16.23
Valuation Ratios
Price/Earnings Ratio 17.21
16.1
Price to Sales P/S
1.69
1.37
Price to Book P/B
87.71
Free Cash Flow per Share
15.56
14.15
Management Effectiveness (%)
Return On Assets 18.13%
17.70%
Return On Investment 87.11%
31.28%
Return On Equity 364.84%
Efficiency
Receivable Turnover
31.04
Inventory Turnover
4.1
3.44
Total Asset Turnover 1.85
2
Free Cash Flow/Net Income
What is Ratio Analysis? Briefly explain and cite your resources: Ratio analysis is a financial a company's profitability, liquidity, solvency, and operational efficiency. Common ratios in
decision-making and performance benchmarking.
decision-making and performance benchmarking.
References:
Brigham, E. F., & Houston, J. F. (2018). Fundamentals of Financial Management. Cengage L
Based on the ratio analysis above, in which company would you be willing to invest and w
lower P/E ratio which suggestsa more attractively priced stock, a higher inventory and tot
Baker, B. (n.d.). What is the price-to-earnings ratio and how is it used?. Bankrate. https://w
Beaver, S. (2022). When to use quick ratio. Oracle NetSuite. https://www.netsuite.com/po
Beers, B., Costagliola, D., & Howard, E. (2022.). How is asset turnover calculated?. In
Fernando, J., Brock, T., & Clarine, S. (2022, July 11). Current ratio explained with formula a
Fernando, J., Drury, A., & Ecker, J. (2022, October 18).Price-to-Book ratios Formula, and Ex
Fernando, J., Kindness, D., & Munichiello, K. (2022, June 27).Inventory Turnover, hat It Is, Fernando, J., Mansa, J., & Clarine, S. (2022, June 27).Return on Equty and What It Means. Fernando, J., Mansa, J., & Kvilhaug, S. (2022, June 30).Return on Investment, How to Calcu
Fernando, J., Mansa, J., & Rathburn, P. (2022, August 10).Debt-to-Equity Formula and How
Hargrave, M., James, M., & Eichler, R. (2022, June 14).Return on Assets and "Good" ROA D
Hargrave, M., Kindness, D., & Kvilhaug, S. (2022, June 29).Price-to Sales(P/S) Ratio: What I
Hayes, A., James, M., & Munichiello, K. (2022, June 17).Interest Coverage Ration Formula,
Hayes, A., James, M., & Perex, Y. (2022, June 18).Operating Margin Formula for Calculatin
Johnson, S. (2022, June 29).What Is EBITDA?Business News Daily.wsdaily.com/4461-ebitd
Kenton, W., & Mansa, J. (2021, May 31).Free Cash Flow Per Share.www.investopedia.com
Home Depot
33.535
17.21%
15.30%
14.40%
24.49%
0.1
1.11
-71.16
-75.16
18.26
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