Assume that ABC Company is a small specialty retail store.
Ratios are relevant when assessed over time or across companies. IBISWorld is a comprehensive resource containing market research and statistics, which can be used to compare ABC Company to the industry and leaders in the industry.
Below is a brief introduction to financial ratios using IBISWorld and screenshots that provide guidance for accessing IBISWorld via the Trident library.
Required
Part 1
First, choose three ratios from the background materials. ABC is a simple organization (see balance sheet in case), so pick ratios for which sufficient financial data is available. Verify that at least one of the ratios is included in the IBISWorld database.
Identify the name of the ratio, the formula, and show your computations.
Part 2
Next, respond to the following questions.
Comment on the purpose and information conveyed by each ratio.
What did you learn about ABC Company by reviewing the three ratios?
What is your conclusion about the solvency and efficiency of the company?
How successful is ABC Company relative to the industry average and leaders in the small specialty retail store industry? Write two paragraphs or more for this question. Refer to an actual ratio found in the IBISWorld database to support your conclusion.
