Go to the Morningstar’s website ( http://news.morningstar.com/articlenet/article

Question

Go to the Morningstar’s website ( http://news.morningstar.com/articlenet/article.aspx?id=837427 ) or go to (http://www.morningstar.com/ (Links to an external site.)Links to an external site.) and pick up any of the following company and evaluate the financial position of that company:

Apple

Disney

AT&T

Dodge

1- You are supposed to CALCULATE at least one ratio from the (a) the liquidity ratios, (b) Leverage Ratios, (c) Asset Effectiveness ratios, and (d) Profitability ratios.

2- Based on your calculations above and based on comparing the same ratios to the company’s competitors, evaluate the financial position of the company

Explanation / Answer

A) The Liquidity Ratio - Current Ratio

Current Ratio = Current Asset/ Current Liabilities

Apple = As per Financial of 2017-09

Current Asset = 128645 , Current Liabilities = 100814

= 128645/100814 = 1.27 times

(b) If We compare apple with Samasung then current ration of samsung is as follows

Current Ratio = 141429704/54704095 = 2.58 times

If we compare then samsung has higher current ratio then apple so that means samsung has higher asset to pay off its current laibilities then apple so samsung has capability to pay off its liabilities almost 2.5 times its asset and apple has only 1.3 times. So samsung has better financial position then apple. As standard current ratio is 1 both companies have greater than standard ratio which is better for any investor to take decision.  

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