The four key users of financial statements are owners/managers, lenders, investors and governments. These users rely on financial statements to evaluate a company’s past financial performance as indicators in areas of profitability, liquidity, leverage, and efficiency; to create benchmarking matrixes; and to support future decision-making.
Choose two companies (Electrical Contractors) in the same industry whose financial statements are available online. Complete several financial ratios for each company and compare them. Share your analysis and answer the following questions in a minimum of 175 words:
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Write My Essay For MeWhat did your analysis tell you about these companies?
What sorts of decisions would this analysis help you make; such as buying stocks, considering accepting an employment offer,etc.?
SAMPLE SOLUTION
This paper analyzes the financial statements of two electrical contractors Quanta Services Inc. and EMCOR Group Inc. The following are the financial ratios as gleaned from the financial statements for the year ended 31st December 2019.
| Liquidity ratios | Quanta Services Inc | EMCOR Group Inc. |
| Current ratio=current assets- /current liabilities | 3,830,986 / 2,263,049 = 1.69 | $2.66B/ $1.94B = 1.37 |
| Quick ratio=(current assets-inventories)/current liabilities | 3,830,986 – 55,719 / 2,263,049 = 1.67 | $2.62B/ $1.94B = 1.35 |
| Profitability ratios | Quanta Services Inc | EMCOR Group Inc |
| Return on Assets= Net Income/Total Assets | $0.40B/$8.33B =4.88% | $0.33B/ $4.83B = 7.21% |
| Return on equity (ROE)= Net Income/Shareholder’s Equity | $0.40B/$4.05B =10.37% | $0.33B/ $2.06B = 16.79% |
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