Provide your overall evaluation of each highlighting strengths and weaknesses of each firm compared against the other.

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This assignment requires the following calculations be done and setup in Excel using the data provided in the attached spreadsheet. Create a new Excel sheet, do not complete calculations on the data sheet. Then once these calculations are completed need a 1 Page Executive Summary analyzing the financial calculations. Data File has been attached.
Case 1: Complete the Data Case Presented in Chapter 2 (Modified Instructions)
This is your second interview with a prestigious brokerage firm for a job as an equity analyst. You survived the morning interviews with the department manager and the Vice President of Equity. Everything has gone so well that they want to test your ability as an analyst. You are seated in a room with a computer and a list with the names of two companies—Ford (F) and Microsoft (MSFT).
1. For each of the four years of statements, compute the following ratios for each firm: Calculate the Enterprise Value for each firm. For consistency purposes use the following formula: Market Capitalization of Equity + Long-term Debt + Short-term Debt – Cash, Cash Equivalents and Short-Term Investments.
2. Valuation Ratios
Price-Earnings Ratio (for EPS use Diluted EPS Total) (Stock Price / EPS)
Market-to-Book Ratio (Market Capitalization / Book Value of Equity)
3. Profitability Ratios
Operating Margin = (Operating profit/loss / Total Revenue)
Net Profit Margin = (Net Income / Total Revenue)
Return on Equity = (Net Income / Equity)
4. Financial Strength Ratios
Current Ratio = (Current Assets / Current Liabilities)
Book Debt-Equity Ratio (Use Long-Term Debt) = (LTD / BV of Equity)
Market Debt-Equity Ratio (Use Long-Term Debt) = (LTD / MCAP)
Interest Coverage Ratio (Use Operating Income / Interest Expense Net of Capitalized Interest) = (Interest / Operating Income)
5. Examine the Market-to-Book ratios you calculated for each firm. Which, if any, of the two firms can be considered “growth firms” and which, if any, can be considered “value firms”?
6. Compare the valuation ratios across the two firms. How do you interpret the difference between them?
7. Consider the enterprise value of each firm for each of the four years. How have the values of each firm changed over the time period?
8. In general, compare the ratios that you calculated for the two firms. Provide your overall evaluation of each highlighting strengths and weaknesses of each firm compared against the other.
Ratios can be analyzed using
1. Trend or time-series analysis: analysis of a firm financial performance over time.
2. Cross-sectional analysis: Comparing one firm against others
3. Industry comparative analysis: Comparing one firm against industry averages
There are five groups of ratios:
Liquidity ratios indicate the ability of a firm to meet its short-term obligations as they come due. Ratios include current ratio, quick ratio, and the average payment period (Melicher & Norton, 2020).
Asset management ratios show the efficiency of operations by indicating the dollars of sales supported by different types of assets. Ratios include total assets turnover, fixed assets turnover, average collection period, and inventory turnover (Melicher & Norton, 2020).
Financial leverage ratios are used to show the level of debt used to finance assets and the ability of the firm to service its debt obligations. Ratios include total debt to total assets, total debt to equity, equity multiplier, interest coverage ratio, fixed charge coverage ratio (Melicher & Norton, 2020).
Profitability ratios indicate the ability of the firm to earn returns on its sales, assets, and equity. Ratios include operating profit margin, net profit margin, operating return on assets, return on total assets, and return on equity (Melicher & Norton, 2020).
Market value ratios show the value of a firm in the marketplace relative to financial statement values. Ratios include price/earnings ratio and price-to-book-value ratio (Melicher & Norton, 2020).

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