Industry-Specific RatiosThere are many ways of using standardized financial information beyond those discussed in this unit. The usual goal is to put firms on an equal footing for comparison purposes. For example, for auto manufacturers, it is common to express sales, costs, and profits on a per-car basis. For each of the following industries, give an example of an actual company, and discuss one or more potentially useful means of standardizing financial information:
public utilities
large retailers
airlines
online services
hospitals
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Once you identify the company for each industry, select a particular firm, and calculate four ratios of your choice for 2 consecutive years. You should include at least one ratio that measures the company’s capital structure and at least one ratio that measures the company’s debt and equity position.
After computing the ratios, provide a 2-year trend analysis. Evaluate the impact of capital structure decisions on the stock price by discussing any significant changes in the capital structure ratios over the 2-year period. Similarly, examine the impact of debt and equity decisions on the stock price by discussing any significant changes in the debt and equity ratios over the 2-year period.
Finally, discuss whether you would or would not invest in this company, including an explanation of why that involves the ratio analysis. Consider the company’s financial position, including its capital structure and debt and equity decisions, in your analysis.
Your case study must be at least three pages in length. You must provide at least three references. Adhere to APA Style when constructing this assignment, including in-text citations and references for all sources that are used. Please note that no abstract is needed.
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