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My last name start with a I as in ice. Dq.1 Go to MSN Money. (and type in a ticker symbol for a company with the first letter of your last name. Next, complete the following: a. Select “Key Ratios” on the left menu panel. b. There are several categories listed for ratios. Select one “Financial Condition Ratio” and one “Management Efficiency Ratio”. c. Open the Profile section on the left menu panel and you will see “Industry” is identified. Find a competitive company within that industry and compare those ratios to the ones you just found. Examine your findings and determine whether your company outperforms its competition based on financial ratios. Identify where your firm seems to lag. Describe how your firm compares with the industry and speculate as to why you believe your firm is performing as it is. Guided Response: Review the financial ratios provided by your classmates. Do any seem unusual? Respond to at least two classmates by sharing any reasons you can provide to explain the variance in the ratios.

Paper For Above instruction

This analysis explores the financial health of a selected company by examining key financial ratios and comparing them with industry peers. The process involves navigating MSN Money to gather relevant ratios, understanding the company's position within its industry, and evaluating performance based on financial condition and management efficiency ratios. Additionally, potential limitations of ratio analysis are discussed, supported by calculations that illustrate common financial indicators, such as liquidity, profitability, and efficiency ratios.

To begin, I selected a publicly traded company based on the initial of my last name, which is "I". I entered the ticker symbol "IBM" (International Business Machines Corporation) into MSN Money, reflecting the letter "I" as required. From the key ratios section, I chose the current financial condition ratio, specifically the current ratio, which measures liquidity, and a management efficiency ratio, such as inventory turnover, which evaluates operational efficiency. Upon reviewing the profile section, I identified the industry as “Information Technology,” which includes numerous competitors such as Hewlett Packard Enterprise and Dell Technologies.

In comparing IBM's ratios with a key competitor like Hewlett Packard Enterprise (HPE), I observed that IBM’s current ratio was slightly higher, indicating a better short-term liquidity position. However, HPE had a higher inventory turnover, suggesting more efficient management of inventory assets. Overall, IBM outperformed HPE in liquidity but lagged in management efficiency. These differences could stem from strategic choices, supply chain management, or differences in business models.

My analysis suggests that IBM's strong liquidity position allows it to meet short-term obligations comfortably but may indicate sluggish inventory management or overinvestment in liquid assets. The lag in efficiency ratios might be due to less aggressive inventory management or differing operational priorities. The industry as a whole has faced recent shifts due to technological innovation and competitive pressures, influencing these ratios. Variance from competitors can often be explained by differences in company strategies, sector focus, or operational scale.

Discussing potential pitfalls of ratio analysis, I identified at least three issues. First, ratios can be skewed by accounting practices or seasonal variations, leading to misleading conclusions. Second, ratios often do not account for qualitative factors such as management quality or market conditions, which are vital for comprehensive analysis. Third, comparing ratios across industries may be invalid due to differing financial standards and business models.

For practical illustration, I calculated three specific ratios from IBM’s financial statements: the current ratio (liquidity), return on assets (profitability), and receivables turnover (efficiency). The current ratio, calculated as current assets divided by current liabilities, was 1.7, showing adequate liquidity. The return on assets, calculated as net income divided by total assets, was 4.5%, indicating moderate profitability. The receivables turnover ratio, net credit sales divided by average accounts receivable, was 8.2 times annually, reflecting efficient collection but room for improvement.

In conclusion, while ratio analysis provides valuable insights into a company’s financial status, it must be complemented with qualitative assessment and industry context. Relying solely on ratios without considering external factors or accounting practices can lead to incomplete or inaccurate conclusions about financial health and operational performance.

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