Prior to beginning work on this discussion forum , read Chapters 3, 4, and 5 in the course textbook, Using Financial Accounting Information: The Alternative to Debits and Credits,and Chapter 6 in the course textbook, Warren Buffett Accounting Book: Reading Financial Statements for Value Investing.
Using the same company and annual reports that you chose in your Week 1 – Discussion Forum, Reading and Using the Annual Report Case Study, address the following:
- Calculate the gross profit ratio, operating margin ratio, and net income margin ratio for the latest two years, and obtain the industry average ratios (if available) from the IBISWorld database, available through the UAGC Library, or another outside resource of your choice.
- Analyze these ratios and discuss what each of these ratios tells you about the company’s profitability, and how it compares to the industry averages.
- Note any trends in these ratios from year-to-year, and discuss your assessment of the company based on these changes.
- If you were an investor, explain why you would or would not buy stock in the company.