Essay About Profitability Ratio And Liquidity Ratio

Financial Statement Analysis
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Financial Statement AnalysisGermaine JamersonTravis TaylorTricia JonesEnrique ZaragozaRobert CruzACC/561June 09, 2016Neil de Pascal, InstructorIntroduction        Companies have four main Financial Statements: Balance Sheet, Income Statement, Statement of Shareholders Equity and a Statement of Cash Flows.  Ratios are used to evaluate if companies overall performance.  Profitability ratio tells us the ability of an organization to make a Profit.  Liquidity ratio describes whether the company is able to pay off all its liabilities when they become due. Solvency ratio measures the ability of an organization to pay long term commitments, such a bondholders and banks.Ratios        Profitability ratio tells us the ability of an organization to make a Profit.  The most important profitability ratios are Return on Assets (ROA), Gross Profit Margin (GPM), Operating Margin (OM), Return on Equity (ROE), Return on Sales (ROS) and Return on Investment (ROI).        Liquidity ratio describes whether the company is able to pay off all its liabilities when they become due.  It not only measures the cash a company has, but how quickly they convert assets into cash.  Some liquidity ratios are Quick Ratio, Acid Test ratio, Current Ratio and Working Capital Ratio.        Solvency ratio measures the ability of an organization to pay long term commitments, such a bondholders and banks.  Solvency ratios are Debt to Equity Ratios, Debt Ratio and Equity Ratio.Financial Statement InformationBALANCE SHEET COMPARISONChipotleStarbucksUSPSHome DepotAS OF DECEMBER 2015MILLIONSMILLIONSMILLIONSMILLIONSAssetsCurrent Assets8154,3537,91516,993Fixed Assets1,8405,99815,68622,191Other Assets702,0964133,365TOTAL ASSETS$2,725 $12,446 $24,014 $42,549 LiabilitiesCurrent Liabilities2803,65448,91112,526Long Term Liabilities2842,34825,49422,853Other Liabilities336250854TOTAL LIABILITIES$597 $6,626 $74,405 $36,233 EquityCommon stock023,13288Additional Paid in capital1,1734109,347Treasury Stock-1,23500-33,194Accumulated Other C. Income-8-1990-898Non-controlling interests0200Retained earnings2,1985,975-53,52330,973TOTAL S. EQUITY$2,128 $5,820 ($50,391)$6,316 TOTAL LIABILITIES & EQUITY$2,725 $12,446 $24,014 $42,549 Check                     –                        –                        –                        –        INCOME STATEMENT DATAChipotleStarbucksUSPSHome Depot2015MILLIONSMILLIONSMILLIONSMILLIONSRevenue$4,501 $19,163 $68,928 $88,519 Net Income$476 $2,757 ($5,060)$7,009