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. See additional information about the exercise in the conversations. Click on the person with a flag icon in the upper right hand corner of this page. Please ask any questions about this assignment in the class conversation.

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 Document presented below.

TRI Documents

Required:

This paper must be submitted in Microsoft Word. You can use Excel to calculate the ratios and paste a table or picture of the ratios into the Word document.

a. Calculate the select financial ratios for the fiscal year Year 2.

b. Interpret what each of these financial ratios means in terms of TRI’s financial stability and operating efficiency. Comment on each ratio and the trends year by year.

There is not a grading rubric for this assignment. The paper does not have to be in APA format but please include a title page with identifying information with your paper.