Accounting/Tax Related Questions

Ratio Analysis

This activity is designed to help you prepare your paper and is to be written in proper APA format. Before providing your write-up, please perform the following analysis for your chosen company.

Calculate the following ratios for your chosen company: Microsoft

Current Ratio

Return on common stockholder’s equity

Profit Margin

Return on Assets

Equity Ratio

Calculate these same ratios for another company in the same industry for the same period of time. Use at least 2 years of data. You can either choose another company and search the internet for the information, or choose another company in the same industry that one of your class members has chosen and use their posted information. You do not need to include or show your actual calculations, just the results.

Provide an analysis on the ratios that you calculated – what do they mean? How do they compare to the other company? Are there any trends of interest from year to year? Explore the details behind the numbers to explain them (this is what analysis is about).

Please write as if you were preparing a major section of your paper, using proper APA formatting (topic headings and in-text citations) and include references. Feel free to use tables, charts and graphs if you desire. It is suggested that you include a section for each ratio to discuss the nature of the ratio itself as well as your analysis.

Here are some pointers for writing this section of your paper:

· You should describe each ratio you are presenting and what it is used for.

· Avoid informal, conversational writing style (no slang terms, writing in the first person, etc.)

· Analysis goes beyond stating the obvious. So if you are including tables, or narrative, that show increases or decreases from year to year or differences between your chosen company and a competitor, don’t just note the differences. The reader can already deduce this from the table. Instead, focus on analyzing why there are differences or changes and research the details. Discuss what the differences mean (for example, is it better to have a higher or lower current ratio?) Even a “B” paper will need some level of analysis rather than just stating the numbers and whether or not they went up or down.

· Use more than one year of data. Ratio analysis is not as meaningful when it is based on one year alone.

· Include in-text citations in APA format when using information from another source. This does not just include direct quotes. And try not to use lengthy direct quotes unless there is something unique about the wording that needs to be preserved. Write in your own words.

· Make sure you use headers (in APA format) for each topic area.

Include the Balance Sheet and Income Statement (extracted from the 10-K report) for your company and your competitor company an attachment to your posting.