Evaluate the results for each company and explain what each ratio means. Compare and contrast the companies.

Description

Submit a paper which is 2-3 pages in length, exclusive of the reference page. The paper should be double spaced in Times New Roman (or its equivalent) font which is no greater than 12 points in size. The paper should cite at least three sources in APA format. One source can be your textbook.

Please describe the circumstances of the following case study and recommend which company to purchase. Explain your approach to the problem, perform relevant calculations and analyses, and justify your recommendation. Ensure your work and conclusions are thoroughly supported.

Case Study:

You work in the mergers and acquisitions department of a large conglomerate who is looking to invest in a retail business. Two companies, Fashion Forward and Dream Designs, are the final two options being considered. You have the most recent available income statements and two years of balance sheets for each company.

Compute the following ratios for each company:

Profit Margin Ratio

Return on Assets

Current Ratio

Quick Ratio

AR Turnover Ratio

Average Collection Period

Inventory Turnover Ratio

Average Sales Period

Debt to Equity Ratio

For this assignment:

Compute all required amounts and explain how the computations were performed

Evaluate the results for each company and explain what each ratio means.

Compare and contrast the companies.

Based on your analysis:

recommend which company the organization should pursue

Thoroughly support your conclusion, including what other factors should be considered

Be specific.

Superior papers will:

Perform all calculations correctly.

Articulate how the calculations were performed.

Evaluate the ratios computed and explain the meaning of the ratios.

Compare the companies.

Recommend which company to pursue, supported by well-thought-out rationale and considering any other factors that could impact the recommendation.

Be sure to use APA formatting in your paper. Purdue University’s Online Writing LAB (OWL) is a free website that provides excellent information and resources for understanding and using the APA format and style. The OWL website can be accessed here: