IBM and HP The next day, the CFO asks you, your new financial analyst, and the firm's marketing manager to come to his office.
He hands you a file of financial statements from the company's two competitors in the computer hardware industry. He says that the CEO has requested a report analyzing the company's two main competitor's financial statements and predicting their next big moves.
In turn, this will provide him with some guidance on how to prepare a counterstrategy in the coming year for your company. He requests that the team do the following:
1. An interpretation of the health of each company based on the ratios for each company Please look in table for the IBM and HP Ratios
|
Financial Ratios
|
IBM
|
HP
|
|
Gross Margin
|
50.14%
|
24.01%
|
|
Return on equity
|
95.13%
|
78.21%
|
|
Current ratio
|
1.3
|
1.1
|
|
Total debt/Equity ratio
|
2.79
|
0.77
|
|
Total liabilities/ Total assets
|
87.73%
|
73.21%
|
Gross Profit Margin = (Sales - Cost of Goods Sold)/Sales
Return on Equity = Net Income/ Shareholder Equity
Current Ratio = Current Assets/Current Liabilities
Debt-to-Equity Ratio = Total Debt/Total Equity
Debt Ratio = Total Debt/Total Assets