Question

based on these giving ratios, write a short comparison analysis between company A and company B

Beta 2015 Company Name 2014 Ave, Beta COMPANY A COMPANY B 0.072415 -0.0132 COMPANY A 2016 144,677.1 2014 188,122.6 136,4724 51,650.2 2015 149,167.4 106, 161.6 43,005.8 Average % Change -11.9% -61.1% -18.2% 34,577.8 Revenue - Cost of Revenue Gross Profit - Operating Expenses Operating Income - Interest Expense Pretax Income - Income Tax Expense Net Income 24,735.5 13.688.0 37.962.1 1,613.7 36,546.1 13,787.9 29.217.9 1.492.7 27.418.0 -49.6% -19.2% -53.7% -20.8% 22.8573 #DIV/01 23,347.10 187842 15028.5 -19.8% COMPANY B 2016 31,198.7 2014 54,236.8 52,511.5 1.725.2 2015 25,513.9 25,218.5 295.3 Average % Change -15.3% -76.0% -91.4% Revenue Cost of Revenue Gross Profit - Operating Expenses Operating Income Interest Expense Pretax Income - Income Tax Expense Net Income 991.5 733.7 -990.0 1,055.4 -760.1 281.7 -758.5 -46.8% 86.7% -47.9% -244.4% 270.3 681.4 1,346.0 #DIV/0! 0.0 681.4 0.0 -758.5

Answer 1

Summary of the analysis of Company A and Company B • The beta of company A is positive while the beta of company B is negative meaning that when the market will move in one direction, the company returns will move in other direction. The revenue of both the companies have been falling but the company B has experienced more fall in their revenue. The operating income of company B seems to be significantly affected due to rising cost associated with it. In 2015, the cost of revenue for company B was close to 98% of the revenue. The net income of company A is falling but positive while company B experienced net loss in the year 2015. • Company A liquidity ratio seems to be far better than company B. The average cash ratio for company B is 0.29 while that for company A is 1.65 • The profitability ratio for company A is also better than B. The company B had negative return on equity as well as assets in 2015. • The solvency ratio shows that company B has significant amount of debt in its capital structure.