The financial performance of a company is important to different stakeholders such as investors, employees, and creditors. Understanding the financial statements and how to evaluate them is important to make good financial decisions. Financial ratios are used to determine the health of a company. Ratios are a tool used to analyze the finances of the company using the balance sheet, income statement, and cash flow statement.

Select two of the four companies shown below. Use the   for your research.


· Ford

· General Motors

· Pepsi

· Coca-Cola

1. Compare the firms’ profits for the past two years.

2. Compute the working capital for each firm.

3. Determine the price-earnings (P/E) ratio.

4. Calculate the debt-to-equity ratio.

Explain what each calculation tells you about the firm. Are they a good investment? Compare the two companies and explain which is the better investment and why. What other types of ratios would be helpful in this analysis? Explain.

Try to make sure that your selected companies are different from your classmates’.

Embed course material concepts, principles, and theories, which require supporting citations along with  two scholarly peer-reviewed references supporting your answer. Keep in mind that these scholarly references can be found in the Saudi Digital Library by conducting an advanced search specific to scholarly references.

Be sure to support your statements with logic and argument, citing all sources referenced. Post your initial response early and check back often to continue the discussion. Be sure to respond to your peers’ posts as well.

Text book:

Keown, A. J., Martin, J. D., & Petty, J. W. (2020). Foundations of finance: The logic and practice of financial management (10 th ed.). Prentice Hall. Print ISBN 13: 9780134897264 eText ISBN-13: 9780135160619