This activity helps students recognize the significant role accounting plays in providing financial information to management for decision making through the evaluation of financial statements. This experiential assignment requires students to use ratios to evaluate and analyze a company’s liquidity, solvency, and profitability.
Two-Rivers Inc. (TRI) manufactures a variety of consumer products.
The company’s founders have run the company for thirty years and are now
interested in retiring. Consequently, they are seeking a purchaser, and a group
of investors is looking into the acquisition of TRI. To evaluate its financial
stability, TRI was requested to provide its latest financial statements and
selected financial ratios. Summary information provided by TRI is presented
below.
Required:
a. Calculate the select financial ratios for the fiscal year Year
2. (use MS word or excel but excel is more recommended)
b. Interpret what each of these financial ratios means in terms of
TRI’s financial stability and operating efficiency.
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