**Review** both the Balance Sheet and Income
Statement for XYZ Company, Inc.

**Calculate** the following TEN
financial ratios:

- Quick Ratio
- Inventory Turnover
- Accounts Receivable Turnover
- Total Debt Ratio
- Debt to Equity Ratio
- Gross Profit Margin
- Net Profit Margin
- Return on Assets (ROA)
- Return on Equity (ROE)
- Earnings Per Share (EPS)

**Write** a summary of your analysis to
include the following for **EACH** ratio:

- What does the ratio measure?
- How is it calculated?
- What is considered a “good” or acceptable figure for the ratio?
- What is your calculation for the ratio as it relates to XYZ? Is their result acceptable or not?

**Grading Outline (9.50 points
total):**

Introduction – .50 points

Calculation: Quick Ratio – .25 points

Discussion: Quick Ratio – .50 points

Calculation: Inventory Turnover –
.25 points ****Use
AVERAGE Inventory****

Discussion: Inventory Turnover – .50 points

Calculation: Accounts Receivable
Turnover – .25 points ****
Average accounts receivable should be used. However, you do not have the
beginning accounts receivable figure. So simply use ending accounts receivable
on this one.****

Discussion: Accounts Receivable Turnover – .50 points

Calculation: Total Debt Ratio – .25 points

Discussion: Total Debt Ratio – .50 points

Calculation: Debt to Equity Ratio – .25 points

Discussion: Debt to Equity Ratio – .50 points

Calculation: Gross Profit Margin – .25 points

Discussion: Gross Profit Margin – .50 points

Calculation: Net Profit Margin – .25 points

Discussion: Net Profit Margin – .50 points

Calculation: Return on Assets – .25 points

Discussion: Return on Assets – .50 points

Calculation: Return on Equity – .25 points

Discussion: Return on Equity – .50 points

Calculation: Earnings Per Share –
.25 points ****Assume
1000 Shares****

Discussion: Earnings Per Share – .50 points

Conclusion – .50 points

APA (includes title page, references, spelling, grammar, readability, etc) – 1 point

**Required References (make
sure to double-space and format into a hanging indent):**

Parrino, R., Kidwell, D. S, & Bates, T. W. (2012). Fundamentals of corporate finance (2nd ed). Hoboken, NJ: Wiley.

University of Phoenix. (2014). Sample financial statements. Retrieved from University of Phoenix, FIN571 – Corporate Finance website.

**Example: Current Ratio
(each ratio discussion should be similar to this)**

*The current ratio is a measure of
a firm’s liquidity. It specifically measures a firm’s ability to fulfill its
short-term obligations. The current ratio is calculated by dividing current
assets by current liabilities. A ratio that is too low could be an indicator of
potential cash issues, while a ratio that is too high could be an indicator of
capital inefficiency. While an acceptable ratio will depend on several factors,
most firms strive for a current ratio between 1 and 2. XYZ, Inc. has a current
ratio of 1.74. This ratio falls within the acceptable range which suggests that
this firm should be able to fulfill its short-term obligations at this time.*

**Additional Notes:**

I do **NOT** need to see
your actual calculations. All I need is your final number within your
discussion paragraph per my example above. So your paper should consists of
approximately 12 paragraphs including the intro and summary. Also, there is a
list of ratios at the end of Chapter 4 (Summary of Key Ratios).

Don’t get hung up on the verbiage between the statements vs the formularies. For example, Net Income is the same as Net Profit in this case. Cost of Goods Sold is the same as Cost of Sales in this case. Debt is another word for Liabilities so Total Debt is the same as Total Liabilities in this case.

**FREEBIES**: Net
Profit Margin and Gross Profit Margin calculations are already given to you on
the P&L Statement if you look closely.