Competitor Analysis - Ratio and Financial Analyses
This assignment focuses on comparing your business to two competitors to see how they are performing relative to their peers.
- Compare the most recent year's Income Statements VERTICALLY - of your business and the two competitors - This will show how effective your business is in managing expenses relative to its competition. (A Horizontal Analysis is not meaningful when comparing different entities because of the size differences of the entities, so just a vertical analysis is all you can really do.
- Then, compare the businesses among each other using ratio analysis. Again, the business's are of different sizes, but ratio analysis does wonder's to draw comparisons that are meaningful despite the size of the business.
Liquidity ratios: Current, Days Cash on Hand, Days receivables,
Debt Management Ratio: Debt to Equity
Profitability Ratios: Operating Margin and Return on Assets.
Sample Solution