.:
Required
1. Which company is most profitable according to its return on assets?
2. Which company is most risky according to the debt ratio?
3. Which company deserves increased investment based on a joint analysis of return on assets and the debt ratio? Explain
Assignment 1: Discussion—Business Metrics
Understanding business metrics as key performance indicators (KPIs) is a key part of business strategy and management. In this assignment, you will look at financial performance measures.
Financial performance measures are vitally important to assessing corporate performance. However, financial measures are primarily backward looking in that they measure the results of past actions, and do not always give a reliable indication of future direction.
Using the module readings, Argosy University online library resources, and the Internet, respond to the following:
Write your initial response in approximately 300 words. Apply APA standards to citation of sources.
By Friday, February 8, 2013, post your response to the appropriate Discussion Area. Through Tuesday, February 12, 2013, review and comment on at least two peers’ responses.
Consider the following when you respond to your peers’ posts:
| Assignment 1 Grading Criteria |
Maximum Points
|
|
Explained with examples forward-looking performance measures and the corresponding strategies of the business unit. |
4
|
| Actively contributed to the discussion by providing points of view with rationale, challenging points of the discussion, or drawing relationships between points of the discussion. |
12
|
| Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation. |
4
|
| Total: |
20
|
Required:
(a) Compute the following items for both companies for 2008 and 2009:
(1) Working capital
(2) Current ratio
(3) Quick ratio
(b) Given the data computed in part (a), which of these two companies had the stronger liquidity at the end of 2008 and at the end of 2009? Why?
(c) In your opinion, which of the three measures that you computed in part (a) is the best measure of liquidity? Explain.
(d) Review the data presented for each company. Are there any unusual items or unusual relationships in either company’s data that a decision maker might want to investigate further? If so, identify these items and the issues or questions that decision makers would likely raise.