Question

RATIOS	Communications/Electronics	AT&T	Sprint	ANALYSIS
Profitability Ratios (%)
Gross Margin	59.02	54.23	58.08
EBITDA Margin	-	-	-
Operating Margin	16.23	13.84	-2.89
Pre-Tax Margin	13.79	9.59	-10.1
Effective Tax Rate	18	18.91	-1.8
Financial Strength
Quick Ratio	1	0.52	0.26
Current Ratio	1.02	0.81	0.67
LT Debt to Equity	145.46	87.2	196.43
Total Debt to Equity	160.44	96.06	196.43
Interest Coverage	-	-	-
Valuation Ratios
Price/Earnings Ratio	65.95	11.21	203.67
Price to Sales P/S	1.91	1.18	1.09
Price to Book P/B	3.4	1.14	1.38
Free Cash Flow per Share	59.33	18.63	-
Management Effectiveness (%)
Return On Assets	5.04	0.94	-3.11
Return On Investment	6.49	6.97	-3.59
Return On Equity	8.2	13.03	9.92
Efficiency
Receivable Turnover	13.88	8.44	8.86
Inventory Turnover	27.28	-	13.37
Total Asset Turnover	0.49	0.32	0.37
Free Cash Flow/Net Income	13.88	-	8.86
1- Ratio Analysis: Compare the two companies based on their ratios. Use the last column and describe how each company is doing in relation to the ratios. Explain the significance of how the company ratios compare to the industry and each other. 2- What is Ratio Analysis? 3- Based on the ratio analysis above, in which company would you be willing to invest and why?

Answer 1

answer 1 sprint ratio are better than at&t in following ratio

*gross margin

*and all the efficency ratio .

IN REST of the ratio at&t is better than sprint

answer 2 Ratio analysis is a quantitative method of gaining insight into a company's liquidity, operational efficiency, and profitability by studying its financial statements such as the balance sheet and income statement. Ratio analysis is a cornerstone of fundamental equity analysis.

answer 3 based on above ratio i will invest in at&t because they have the better ratio than sprint expect in efficency ratio. however if we look at industry level ratio both of the companies are under performing