Financial Analysis of Public Corporations

Financial Analysis of Public Corporations

  • Submitted By: kdnarducci
  • Date Submitted: 11/05/2010 3:06 PM
  • Category: Business
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Financial Statement Analysis
Learning Team B
Albert Mora
Accounting 561
Instructor: Sandra Hernandez
University of Phoenix/Santa Teresa Campus
October 11, 2010

Financial Statement Analysis
The following essay provides a financial analysis of three public corporations representing three distinct business segments in the free market. The intent is to illustrate the differences in management interpretation for key financial statement indicators when considering the unique business segments. Also the essay will examine how these differences affect data presentation while considering the international accounting standards board (IASB) and the United States financial accounting standards board (FASB) measurement conventions. Last, for one of the subject companies, the use of accrual basis accounting versus cash basis accounting will be analyzed and contrasted.
The three business segments and their respective companies evaluated are manufacturing (Toyota), service (Verizon), and retail sales (Target). The financial indicators compared and contrasted are quick liquidity ratio, current liquidity ratio, DuPont ratio, profit margin, asset utilization, and financial leverage. The following table provides the financial indicators for each of the subject companies. The figures were taken directly from the reported 2009 Income Statements and Balance Sheets (Some calculated using provided data).
Financial Data
Indicator | Toyota | Verizon | Target |
Quick Liquidity Ratio | 1.0 | .52 | .80 |
Current Liquidity Ratio | 1.2 | .78 | 1.7 |
DuPont Ratio (ROE) | 4.72% | .87% | 17.8% |
Net Profit Margin (EBIT) | 9.64% | 13.05% | 7.5% |
Asset Utilization | .66 | .48 | N/A |
Debt to Equity Ratio | 1.78 | 1.68 | 1.08 |
When considering the financial measurements of different business sectors, it is important to stress that each result presents a different reality for each respective industry. For example “A high debt to equity ratio generally indicates an...

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