Raymond, I find your answer to the first question as quite beguiling. You have clearly elaborated why sometimes it is not advisable to compare companies’ financial ratios which are in the same industry since it can be misleading. You went ahead and provided an elaborate example which depicts your understanding of this topic. The manner which you presented your example is riveting because it can be easily understood by any person who has not been in any business class. I agree with your thought that at times comparing the financial ratio of companies that are in the same industries are misleading. Differences in size of the company and stage at which the business run are factors that make a comparison of financial statements of companies within the same industry incorrect (Brigham & Ehrhardt, 2017). Size of a company may differ from each other, so it is at times incorrect to compare financial statements of companies in the same industries. Also, some industry operates at maturity stage whereas others at the infancy stage, and hence it is incorrect to compare financial statements of companies in the same sectors.
Additionally, I find the answer to the second question enthralling because you answered the question adequately and hence, I find your answer very informative. However, I believe there is room for improvement of TFC balance sheets. The company could use sale sell bonds to raise capital: this will help the company to reach its expansion goals (Brigham & Ehrhardt, 2017). The company could decide to sell its bond for long term basis since it will help in raising higher yields compared to the short-term bonds which yield a low profit. Besides selling its bond, TFC can attain its expansion goals by issuing some of the shares common stock (Brigham & Ehrhardt, 2017). Vending common stock is an attractive solution since it raises funds for the company immediately for the expansion project instead of acquiring more debt that may be detrimental to the company in the long run.
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References
Brigham & Ehrhardt. (2017). Financial Management: Theory and Practice-Chapter 16: Supply Chains and Working Capital Management. 15 th edition.
https://bookshelf.vitalsource.com/#/books/9781337682947/cfi/6/2[;vnd.vst.idref=htmlnav ]!
