Profitability ratio
**The analysis of both statements should be discussed and a graph or chart can be used to reflect the differences in the two years**
- Financial Ratio Analysis:
Financial ratio analysis calculates and evaluates various indices that measure HSO/HS risk exposure, activity, profitability. Calculate and evaluate the liquidity ratio and profitability of your HSO from the two years of statements using the following two ratios:
Liquidity ratio
- Current ratio: total current assets/total current liabilities (a current ratio greater than 1 means the company has enough assets to cover all current liabilities should the need arise
Profitability ratio
- Operating margin: (operating revenue-operating expense)/operating revenue
**Analyze, compare and contrast the difference in ratios over the two years. A graph or chart can be used to reflect the differences in the two years**