Question

My company is General Dynamics Corporation and I need to get information on a competitor.

Find financial ratios for the company for the last 1-3 years and its major competitor General Dynamics Corporation (GD) for the last year in the Internet.

a. Present the ratios as the table(s) in your project.

b. Write an analysis of the ratio results that you found. Compare the ratio results against the industry or main competitor. In your analysis you should answer the following questions:

• How liquid is the company?

• How is the company financing its assets?

• Is management generating a substantial profit on the company’s assets?

Answer 1

liquidity ratio:

current ratio : current assets/ current liabilities

2017 2016 2015

18.28/13.05 15.45/12.85 14.57/12.45

1.4 1.2 1.17

a ratio of less than 2 means that the amont of current assets is less in comparioson to the current liabilities. hence, the company is not very liquid.

the debt/equity ratio = debt/equity this ratio mesaures the amount of debt in the company. it is an indicator of the financial leverage

2017 2016 2015

0.91 0.82 0.82

there is a high degree of debt, in proprtion to the equity. the ratio is very close to 1. which shows that a large amount of assets are financed by debt.

profitability ratio::

return in assets : NI/ASSETS

2017 2016 2015

2.91/34.99 2.96/32.87 2.97/32

8.31% 9% 9.28%

the return on assets is quite low. the company is not able to generate sufficient profits on its assets.

let us now anlyse the competetors boeing company,

current ratio

2017 2016 2015

65.161/91.978 62.488/89.18 68.234/88.073

0.71 0.70 0.77

the liquidity situation of this company is bad too. a current ratio of 2 is considered good, below 2 is a indicator of the poor liquidity condition in the company. that means not many current assets are available to finance the current liabilities.

debt/ equity ratio 2017 2016 2015

9.782/0.355 9.568/0.817 8.730/6.335

= 27.55 11.71 1.37

the dependence on debt is increasins with every passing year. the company ihas very high levels of debt in proportion to equity. such high levels of debt is dangerous for the company.

NET INCOME/Assets = 8.197/ 92.33 4.895/88.99 5.176/94/408

= 8.87% 5.5% 5.48%

the return on assets is also very low compared to assets base. teh company is not utilizing the assets effectively to genreate return.