Compute the following ratios for F and MSFT (refer back to Week 1) for the most recent year of financial statements downloaded from Morningstar: Price-earnings ratio (for EPS, use diluted EPS total) Market-to-book ratio (aka price-to-book ratio) Operating margin Net profit margin Return on equity Current ratio Quick ratio Debt-to-equity (for debt, use long-term debt)
Obtain industry averages for each company by going to Reuters (http://www.reuters.com/finance/markets). Click the magnifying glass search icon, enter each company's name, click on Companies, select each company, and then the Financials tab. Scroll down under Valuation Ratios and each ratio you calculated to the industry (ignore the current company ratios as these are not the same as you calculated).
- Analyze the performance of each firm versus the industry, and comment on what you find in terms of strengths and weaknesses.
- Compare and contrast the ratios for F and MSFT. a.What might explain the differences between them? b.Would you recommend investors buy, hold, or sell F and MSFT, based on yo