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LAB #3 In groups of 5, select two publically traded companies on stock exchange (e.g. TSX, New York) These companies must be in the same industry and you need to get approval before you can start the "task." Task: Using the 5 different type of financial formulas, compare the two companies and write a paragraph per formula explaining which one in your opinion is the best to invest money into? Profitability Ratios Net profit margin- Net earnings Revenues Gross profit margin Gross profit Revenues ROA - Profit margin ratio x total asset turnover Net earnings + [Interest expense x (1 - Tax rate) Sales revenue ROE Not comings - Preferred dividende Average common shareholders' equity Short-Term Liquidity Ratios Current assets Sales revenue Average total assets Current ratio Current liabilities Quick ratio-Cash + Accounts receivable + Marketable securities Current liabilities Operating cash flow Operating cash flow to short-term debt Short-term debt and current maturities of long-term debt Activity Ratios Accounts receivable turnover Credit sales Average accounts receivable Inventory turnover Cost of goods sold Average inventory Accounts payable turnover Credit purchases Average accounts payable Solvency Ratios Debt to oquity Total liabilities Shareholders' equity Debt to total assets Total liabilities Total assets Times interest earned - Net earnings + Taxes + interest Interest Operating cash flow to total debt - Operating cash flow Total debt Equity Analysis Ratios Basic earnings per share Net earnings - Preferred dividends Weighted average number of common shares outstanding Price/earnings ratio - Stock market share price Earnings por share

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