Explain the relation between the current and quick ratios for each company.

Project Assignment: Suppose you are a hedge fund analyst whose main responsibility is to do basic financial analysis for the portfolio manager. Your boss has come to you with an assignment. She wants to understand Internet companies better so that she can start investing in them. Since you were an outstanding student in Business Financial Management at Georgetown University, she asks you to examine the financial statements of the three large companies in this space: Alphabet, Amazon, and Facebook. Your boss provides you with a list of questions and issues she wants you to focus on.Instructions: Use the EDGAR database on the SEC website1 to locate the annual reports (10-K) of Alphabet, Amazon, and Facebook for the fiscal year ending Dec 31, 2018. Search by company name and pick the right entity in the search results. For each company, in their 10-Ks, you need to locate (1) the consolidated balance sheets as of 2017 and 2018 year ends and (2) the consolidated income statements for 2017 and 2018. Use these financial statements to answer the following questions. Note that the values you see may be listed in millions or thousands.Warning: Many websites have information, including financial ratios, for these companies. However, financial ratios are often calculated in different ways than we have discussed in class. Be careful – For the purpose of this assignment, you should calculate the ratios yourselves, using the textbook/lecture definitions for each of the ratios you calculate.Question 1: Calculate the current ratio for each firm for fiscal years 2017 and 2018. According to the current ratio, which firm had the least short term liquidity for each fiscal year? Do the current ratios for any of the firms concern you? Why or why not?Question 2: Calculate the quick ratio for each firm for fiscal years 2017 and 2018. Explain the relation between the current and quick ratios for each company. Which company has the highest current/quick ratios? Is this unequivocally a good or bad thing? What would you consider if you were the CFO of that company?Question 3: Calculate the cash ratio for each firm for fiscal years 2017 and 2018. Which of the firms is riskiest in terms of short-term liquidity? Is such a small cash ratio necessarily bad for a firm? Why or why not? Calculate “cash” as the sum of “cash and cash equivalents” and “marketable securities”. 1 https://www.sec.gov/edgar/searchedgar/companysearch.html 3Question 4: Calculate the receivables turnover ratio and days’ sales in receivables for each firm for 2017 and 2018. Interpret each ratio—what does it say on a qualitative level? How do the differences in business models help explain the differences in these ratios?Question 5: Calculate the fixed assets to total assets and fixed asset turnover for each firm for 2017 and 2018. What do these ratios say about the differences or similarities between the firms’ businesses?Question 6: Calculate the total liabilities-to-equity ratio for each firm for 2017 and 2018. Based solely on these ratios, which of the three firms’ common stocks appears to be the most/least risky? Why does a higher liability level in a firm make that firm’s common stock a riskier investment?Question 7: Calculate the ROE for each firm for 2017 and 2018. Use the DuPont Identity to understand the factors that contribute to the differences & similarities in ROEs between firms. Discuss your findings from the DuPont Identity.Question 8: Calculate the market-to-book ratios for Amazon and Facebook for the end of fiscal years 2017 and 2018. Do NOT calculate it for Alphabet. 2 You will need: (1) stock prices at the end of each fiscal year and (2) the weighted average number of shares outstanding for each fiscal year. You can obtain the historical prices from Yahoo! Finance at finance.yahoo.com—use closing stock prices (“Close”, not “Adj Close”) in your calculations. The weighted average number of shares outstanding for each fiscal year is available on the income statement for each company. Look for the language in the income statements akin to “weighted average shares used in computation of earnings per share“. Use the basic number of shares reported. How do marketto-book ratios of Amazon and Facebook compare to each other and how have they changed over time? Explain the dynamics. Is Amazon a value stock or a growth stock on a value-growth spectrum? Give an example of a non-internet stock on the other end of the value-growth spectrum and estimate its market-to-book ratio.Question 9: Teamwork analysis: (i) Describe each member’s specific contributions to completing this project; (ii) briefly discuss whether the work load is evenly distributed (roughly) and (iii) areas for improvement if your group decides to work together again in Group Project #2. In answering part (i), be as specific as possible. For example, “John compiled the financial data for Alphabet, calculated the ratios for Facebook, drafted the initial answers for Questions 1-3, and reviewed and commented on the final PDF report and Excel spreadsheet.”Additional Report Requirements: All calculations must be completed in Excel. Please submit the answers to the questions in numerical order. Do not submit the actual financial statements for each corporation. For questions that require numerical calculations, include a table that shows your inputs and then 2 Alphabet has multiple classes of listed shares (voting, non-voting) making the calculation more technical. 4 your final results in the PDF report. This should be followed by your analysis or answer to the question. For example, if a fictitious question 0 asked you to calculate the ROA and compare it across firms, your answer should look similar to what follows. Be sure to list the companies and years in the order shown below. (The specific values of total assets and net income in the chart below are obviously fake and are used just for an illustration.) On the RHS, is what I should see if I were to navigate into one of the cells calculating the ratio—I should see the formula linking to the underlying inputs. I have also uploaded an Excel example for your reference.