# American Corporation

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American Corporation Analysis
Week 3 Learning Team B Reflection
XXXXXXXX
Accounting 561
March 12, 2016
Professor Jason Williams

American Corporation Analysis (Kellogg’s)
Comparative and ratio analysis are important tool for investors and top company management in order to analyze and to determine organization’s financial performance. Comparative analysis is “changes in a financial statement's items over several accounting periods presented together to detect the emerging trends in the company's operations (Kimmel, 2010-2016). The three comparative analysis parts are intracompany basis, intercompany basis, and industry averages. In addition, “ratio analysis is a quantitative analysis of information contained in a company's financial statements (Business Dictionary, 2016).” There are three types of ratio analysis: liquidity, solvency, and profitability ratios. For this assignment, we will conduct a comparative and ratio analysis to measure profitability and liquidity for Kellogg’s Company.
Kellogg's Analysis Report
“Solvency ratios measure the ability of the company to survive over a long period of time. Long-term creditors and stockholders are interested in a company's long-run solvency, particularly its ability to pay interest as it comes due and to repay the balance of debt at its maturity” ( Kimmel,Weygandt & Kieso 2011).
There are 4 major ratios in:
Solvency Ratio Formulas:
Debt to total assets: Total liabilities/Total assets
Cash debt coverage ratio: cash provided by operation/average total liabilities
Times interest earned ratio: net income + interest expense + tax expense/ interest expense
Free cash flow: cash provided by operation – capital expenditures – cash dividends
2015
Debt to total assets: \$5739, 000,000/\$15, 265, 000, 000= 37.5%
Cash debt coverage ratio: \$1,691,000,000/\$573,900,000= 29.4%
Times interest earned ratio:...

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