Question

Using Tractor Supply Company 2018/2017 financial statements, please do the following

The requirements for the ratio analysis section are as follows.

Compute the following for each of the two most recent years.

Profit margin

Return on shareholders' equity

Current ratio

Interest coverage ratio

1. If you were an accountant for a potential vendor for this company, explain which of these ratios would be of the most interest to you. Would there also be a second ratio of interest to you?

2. If you were an accountant for a potential investor in this company, explain which of these ratios would be of the most interest to you. In your opinion, what other ratio or ratios beyond the ones listed above should also be considered in an investment context?

3.What is your overall opinion of this company based on the limited analysis completed via the four ratios? Feel free to mention any questions that you feel should still be considered in view of the ratios or the changes from one year to the next.

Answer 1

Profit margin = Net income / Net sales

Return on share holders equity = Net income ( Annual) / Shareholders equity

Current Ratio= Current Assets / Current Liabilities

Interest coverage ratio = EBIT/ Interest expenses

As the values where not available unable to calculate the ratios and find out the best option to analyze.