Question

a. What do the financial ratios below show for the last 2 year of Dow Chemical Company

the following ratios for Dow Chemical in 2018

•ROA 1.70%

•ROE 3.81%

•Non current assets ratio 0.92

•Quick ratio 0.82

•P/E ratio 32.13

•Total liabilities to equity ratio 0.85

the following ratios for Dow Chemical in 2017

•ROA 1.17%

•ROE 2.47%

•Noncurrent assets ratio 1.02

•Quick ratio 1.19

•P/E ratio 78.26

•Total liabilities to equity ratio 0.88

b. Select two major competitors to Dow Chemical and Dupont and observe their ongoing key financial performance ratios for comparison by using the same ratios above to evaluate your selected M & A. Show the competitors' ratios for the latest 2 years.

c.Additionally, show how the stock prices of the two competitors are performing in the past 2 years.

Answer 1

Particulars	2017	2018	Comments
ROA	1.17%	1.70%	Return on Assets have decreased which can be due to decrease in profit where assets being constant or increase in Assets. Since, Non Current asset has decreased, most likely the profit for the year has decreased compared to last year.
ROE	2.47%	3.81%	Return on Equity have increased which can be due to increase in profit where equity being constant or decrease in equity. Since, total liabilities to equity ratio has decreased, most likely the equity amount for the year has decreased compared to last year.
Non Current Assets	1.02	0.92	Non Current Assets to Total Assets ratio has decreased which means wither the non current assets has decreased or the current assets has increased during the year
Quick Ratio	1.19	0.82	Quick Ratio has decreased which means either the quick assets has decreased during the year or current liabilities has increased during the year
P/E Ratio	78.26	32.13	P/E Ratio has decreased which means the Market price of the equity share of the company has decreased or the Earnings per share of the company has increased which may be due to the decrease in equity amount.
Total liabilities to equity	0.88	0.85	Total liabilities to equity has decreased which states that the equity has increased or the total liabilities has decreased during the year.