- Purpose of Assignment
This activity helps students recognize the significant role accounting plays in providing financial information to management for decision making through the evaluation of financial statements. This experiential assignment requires students to use ratios to evaluate and analyze a company’s liquidity, solvency, and profitability.Two-Rivers Inc. (TRI) manufactures a variety of consumer products. The company’s founders have run the company for thirty years and are now interested in retiring. Consequently, they are seeking a purchaser, and a group of investors is looking into the acquisition of TRI. To evaluate its financial stability, TRI was requested to provide its latest financial statements and selected financial ratios. Summary information provided by TRI Document presented below.
a. Calculate the financial ratios for the fiscal year Year 2. (use excel to create formulas and calculate results (see excel tutorial if needed)) The necessary ratios are those found in the TRI documents.You will need to perform research outside of the book.
b.Analyze what each of these financial ratios means in terms of TRI’s financial stability and operating efficiency. I am looking for a dollar for dollar explanation of what they mean for TRI- not a general definition. For example, a current ratio of 1.2 means that for every dollar of current debt, the company has $1.20 in current assets to pay them.
Please make sure you express the ratios properly (as a decimal, dollar or percentage).
Click the Assignment Files tab to submit your assignment. Please Submit a word doc with your explanations AND your excel spreadsheet so that I can see your calculations in the cells.