Description
ENGR 111 HOMEWORK 1
1. (20 points) Find two companies (of your choice) whose financial statements are
publicly available. Fill out the following table using the latest available annual numbers:
Current
Assets
Long Term
Debt
Equity Revenue Net income
Company I
………
Company II
…………
Can you compare the financial health of these companies by looking at the above
numbers? Why or why not? Provide at least three criteria to be able to compare financial
numbers of these two companies.
2. (20 points) Following are the account entries for Company X. Organize company’s
Balance Sheet and Income Statement.
Cash 250
Plant&Equipment 600
Owners’ Equity 500
Long Term Debt 400
Net Income 227.5
Tax 122.5
Interest 50
Cost of Goods Sold 700
Inventory 200
Revenue 1,100
Accounts Payable 150
3. (10 points) Profit margins tend to differ in different industries. An example is that
grocery stores have notoriously low profit margins. Albertson’s Profit Margin is 1.2%
compared to Pfizer’s Profit Margin of 15.6%, a pharmaceutical company.
Then, why invest on grocery stores instead of pharmaceutical companies?
4. (25 points) Pull out the Income Statement and the Balance Sheet for Dec 31, 2018 for
Alcoa Inc., one of the major aluminum companies in the world. Answer the following
questions:
a) What is the Quick Ratio for 2013?
b) What is the Equity Multiplier for 2013?
c) What is the Cash Coverage Ratio for 2013?
d) What is the Return on Equity for 2013?
e) How did the NWC (Net Working Capital) change from 2017 to 2018 (you need
Balance Sheet for 2017) ?
f) How did the Debt/Equity ratio change from 2017 to 2018?
g) What was the ADDITION to retained earnings for 2018?
5. (25 points) LinkedIn is a professional networking service. It is a relatively young
company that filed for an initial public offering(IPO) in January 2011 and traded its first
shares on May 19, 2011, under the NYSE symbol “LNKD”. It was purchased by
Microsoft in June 2016 and continues to trade under LKDN symbol.
Find the latest P/E ratio of LNKD and compare it to an average P/E ratio (You can use
the average P/E ratio of S&P 500, which includes selected 500 companies whose shares
are traded in NYSE or NASDAQ, two of the major exchanges where stocks are traded).
How did the P/E ratio changed since 2011 compared to the average P/E.
Do you see a difference? What maybe the explanation?
ENGR 111 HOMEWORK 1
