Question

The four key users of financial statements are owners/managers, lenders, investors and governments. These users rely on financial statements to evaluate a company’s past financial performance as indicators in areas of profitability, liquidity, leverage, and efficiency; to create benchmarking matrixes; and to support future decision-making.

Choose two companies in the same industry whose financial statements are available online. Complete several financial ratios for each company and compare them. Share your analysis and answer the following questions in a minimum of 175 words:

• What did your analysis tell you about these companies?
• What sorts of decisions would this analysis help you make; such as buying stocks, considering accepting an employment offer,etc.?

Cite your sources in APA format.

Answer 1

I'm answering this question without providing for any reference as per the guidelines of Chegg.

1. Apple and Amazon are two companies which are working in the technological space and these are the two multinational giants which have a competitive edge but they have different style of working as apple is more focused on working upon using of the internal financing to a large extent whereas Amazon is quicky aggressively by using external thin as to a large extent.

when we will compare the ratio then the liquidity ratio of Apple is higher than that of Amazont because the Apple will be having a lower inventory in their hands and when we will be looking at the cash position the Apple will be having a higher cash in their hands so people will be having a better liquidity than the Amazon.

The debt equity ratio of Apple has also been consistently low because the debt proportion in the overall capital has been very lower has Amazon is having a very high significant portion of that in their overall capital because they believe upon taking finance through that and then maximizing upon it as they are looking always for maximization of the profits aggressively.

Profit margins of Amazon has been slightly better than Apple because of its aggressive pricing strategy and segment which are exposed to core competitiveness of Amazon where as apple is also having a good margin but Amazon profitability ratios are better.

if you compare the asset effectiveness and the solvency ratios then Apple has a better ratio than Amazon because asset efficiency is better as the total turnover has been generated to a higher extent using the existing assets and the solvency ratio is better because there is a lower portion of debt in capital structure for apple.

If I will have to buy this talk I will go for buying the Apple because it will provide me with the chance of maximizing upon my capital in the long run and it will also provide me with a better risk aversion as this is a higher cash company and this is also offering with high dividend.