Choose one of the following companies to analyze in fulfillment of Case #1:
• Home Depot (HD)
• Lowe’s (LOW)
• Caterpillar (CAT)
• Deere Enterprises (DE)
• Delta Airlines (DAL)
• Southwest Airlines (LUV)
CASE #1 – FINANCIAL STATEMENT RATIO ANALYSIS (75 Points)
Case #1 is a Financial Statement analysis of the company selected from the list on page 1. Structurally, the
students will present the case as follows:
impact on the ratios is fundamental to understanding the company as a whole. At this stage no analytical
presentation is required – simply identification of material/significant account and why you believe it to be so.
The analytical impact will be addressed in the next segment of the analysis: the ratio analysis, by class (as
defined in the text).
• The student will identify which ratios (not necessarily all the ratios) in each ratio class will be selected for
analysis. Each ratio class must be presented as part of the case. The ratio analysis should show at least a
three period trend in order to adequately develop performance patterns. The financial statements to be source
of the ratio calculations should be the most recent three fiscal years. If industry standards are available, they
can also be presented only to complement the analysis. Comparison to industry averages should never be the
primary measurement of relative performance or primary focus of the presentation. The use of charts, graphs,
tables, etc. are strongly encouraged to present the data for analysis. Finally, within each class, a conclusion on
overall financial performance will be presented. Within the overall context of the ratio analysis, there must be a
logical integration of the significant accounts identified in the financial statement review to the selected ratios.
In the overall presentation, the key concept to remember is that you should focus on the “why”, or “how come”
or “what caused”, and not the “what was” of the ratio trend results.
Sample Solution