solution

The company is General Motors

• Use the company’s income statement and balance sheet to calculatefour (4) keyfinancial ratios. One key ratio must come from each of the four key categories: leverage, liquidity, profitability, and efficiency. The four (4) specific ratios selection must come from the following categories.
  • Leverage Ratios(Long term debt ratio, Total debt ratio, Debt-to-equity ratio, Times interest earned ratio, and Cash coverage ratio)
  • Liquidity Ratios(Net working capital to total assets ratio, current ratio, quick ratio, and cash ratio)
  • Efficiency Ratios (Asset turnover ratio, average collection period, inventory turnover ratio, and Days sales outstanding)
  • Profitability Ratios (Net Profit Margin, Return on Assets, and Return on Equity)
  • Quote industry financial average ratios correlate to the four (4) financial ratios selected for the focal company. Explain the importance of the four (4) averages to compare why averages are important to use.