15 Mar 1. On the company page that you selected
Respond to…
1. On the company page that you selected click on the “Analysis” tab. After doing so, scroll down the page until you see the Financial ratios for the company and the industry.
The company that I chose was Macys, Inc. [NYSE: M]
2. There are several categories listed for ratios. Select one “Financial Condition Ratio” and one “Management Efficiency Ratio”.
Financial Ratio Maceys Industry
Debt/Equity Ratio .78 .76
Current Ratio 1.28 1.14
Book Value/Share 19.60 1.33
Management Ratio Maceys Industry
Return on Equity% 16.15 13.78
Return on Assets% 4.41 6.64
Inventory Turnover 2.91 6.11
3. Also on the company page, on the same ribbon that you found the “Analysis” tab you will find the “Related” tab. Click on it and select a competitive company within that industry and compare those ratios to the ones you just found.
I chose Target [NYSE: TGT]
Financial Ratio Target Industry
Debt/Equity Ratio .91 .76
Current Ratio .83 1.14
Book Value/Share 22.79 1.33
Management Ratio Target Industry
Return on Equity% 28.61 14.06
Return on Assets% 7.41 6.64
Inventory Turnover 5.89 6.11
Examine your findings and determine whether your company outperforms its competition based on financial ratios. Identify where your firm seems to lag. Describe how your firm compares with the industry and speculate as to why you believe your firm is performing as it is.
Both Macy’s and Target do better overall than the industry. For both their Book Value/Share is much greater than the industry average, which was interesting to me. I would think this is because the brands (Macy’s and Target) are of higher class than other competitors, like Walmart.
Respond too…
Examine your findings and determine whether your company outperforms its competition based on financial ratios. Identify where your firm seems to lag. Describe how your firm compares with the industry and speculate as to why you believe your firm is performing as it is.
The company I chose is Paccar Inc. The financial condition ratio I chose is debt/equity ratio, the company has -1,000 compared to the industry at .66. Efficiency ratios “measure the effectiveness and intensity of the firm’s management of its resources” (Byrd, Hickman, & McPherson, 2013). Efficiency ratios include inventory turnover, days sales outstanding, and asset turnover. This company did not list any efficiency ratios so I calculated their asset turnover. Asset turn over is revenues divided by total assets. Paccar has assets in 2019 of 7,628.70 and revenue of 25,599.70 for a ratio of 3.36. The comparison company I chose is Caterpillar Inc (CAT). They had a debt/equity ratio of 1.8 compared to the industry’s .66. Their total assets for 2019 is $39,193, and revenue of 53,800, which is a ratio of 1.37. Asset turn over tells how efficiently a company is using their assets to generate revenue (Hayes, 2019). The higher the ratio, the more efficient the company is. Therefore CAT is operating less efficiently than Paccar is. I’m unable to compare to the industry since they did not report the industry’s ratio. Paccar is doing better compared to CAT with their debt/equity ratio. This ratio tells how well a company is financing their operations through owned funds (Hayes, 2019). CAT is well above the industry ratio, and Paccar appears to be very under. Their ratio is -1000 because they did not report any liabilities, any long term debt, or capital lease obligations in 2019.
Byrd, J., Hickman, K., & McPherson, M. (2013). Managerial finance [Electronic version]. Retrieved from https://content.ashford.edu/ (Links to an external site.)
Hayes, A. (2019). Asset turnover ratio definition. Investopedia. Retrieved from https://www.investopedia.com/terms/a/assetturnover.asp (Links to an external site.)
Hayes, A. (2019). Debt-to-equity ratio- D/E. Investopedia. Retrieved from https://www.investopedia.com/terms/d/debtequityratio.asp
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