Analyzing Financial Statements

By Thursday of this week, go to finance.yahoo.com and choose a company that you wish to analyze.   You may not choose Nike since Nike is used in the lesson for this module and will be used as a sample post for this week’s discussion by your instructor.  Enter the company name in the box to the left of “Get Quotes” near the top left of the page.  Once you have the company overview page open, to the left you will see a list of links for further information on that firm. Near the bottom of the link column are financial statements. Open the firm’s Income Statement; this is the firm’s most recently reported annual income statement.  You should see 3 years of data in almost all cases.  If you do not, choose another firm.  The dates of the Income Statement will vary by company since companies may or may not have a fiscal year end of December 31.

Using the Income Statement you found, compute your chosen firm’s gross profit margin, operating income margin, and net income margin (using the equations found on page 4 of this module’s instruction) for the past 3 years.  Include the numerator and denominator for each ratio.   After you report the ratios, please discuss the economic interpretation of your results.  You might want to read the instructor’s sample post before you begin.  Do not duplicate firms; if someone else has reported on a firm, you may not use that firm for this assignment.  To eliminate duplication of firms, please indicate your firm choice in the title of your post.  Your instructor is likely to have questions/comments on your original post so be sure to be responsive to those potential questions.