In anticipation of Mary's request for comparative analysis, it will be useful at this time to do some research. You know that you can obtain the financials of companies within the same sector or Standard Industry Code as Apix Printing (e.g., commercial printing), and that the North American Industry Classification System (NAICS) Standard Industry 2012 code for Apix Printing is presently 323111. Use Hoover's Pro to search for two other companies in the same industry as Apix Printing when you get to work the next day, you see the following e-mail from Mary:
Here is the list of financial ratios you asked for. I need you to explain the computation of each and compute these for Apix's results for the financial statements you are using for the PowerPoint presentation. Also, compare Apix's 2-year trend results to that of two other firms in the sector. Indicate how each of Apix's ratios differ, and indicate whether the two other companies' ratios or Apix's ratios are indicative of better performance.
Explain the computation for each of the following, and compute each for Apix and two other companies in the same industry as Apix Printing:
Current ratio
(Long-term) debt to equity ratio
Gross margin percentage
Net profit margin percentage
Return on equity percentage
Present your findings of the above data in a table. Add a paragraph that summarizes your results, indicating whether investors would find the financial analysis results of Apix competitive as compared to rivals in the sector. Be sure to include both positive and negative trends in your analysis.
"Good news! I think we've got strong potential investors!" Mary announces.
"That's great!" you reply.
"And now, they are asking for financial information" Mary states.
"Ok, I could provide a 50-page analysis for them!" you say.
"That's exactly what they don't want. I'm beginning to notice that some of the investors don't have a strong finance background, and the last thing we want to do is scare them off with too many financial figures" Mary explains. I would like for you to complete a presentation. However, I want you to keep it simple and clear. Using all 3 Financial Statements, please provide an analysis on Apix's assets, liabilities, cash, and profit. As well, choose 2 additional components on each of the sheets, and provide your initial impression on the company financial situation. Do you think you could handle this?"
"Of course! I'll get started on this right away."