Question

In: Accounting

Student is required to produce a financial document comparing two publicly traded corporations. This project is...

Student is required to produce a financial document comparing two publicly traded corporations. This project is designed to answer the following questions: which company is a better investment?
Student will choose two companies that produce a similar products( i.e. car [ GM &Toyota], retail [Wal-Mart & Target], communications ( T-Mobile & Spring)

source of information: latest annual report published by company 2015 May be available, but if not, use 2014. This report can be found on the company's website.

Elements of paper.
create a side by side income statements comparison for the latest available year for both companies, vertical presentation, with common sized income statements percentage next to each.

Solutions

Expert Solution

Vertical analysis is a tool used for comparison of different companies' financial data for same time period or same company's financial data for different time periods. It depicts the total revenue as 100% and then calculate each item of income statement as the percentage of total revenue in order to compare.

Below income statment shows that Toyota has net income 7.98% of sales and GM has net income 7.14% of total revenue.


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