Liquidity Ratios:

 Current Ratio: Current Assets / Current Liabilities = 3,237 / 4,416 = 0.73

o Interpretation: This ratio indicates FirstEnergy has less than 1 dollar of
current assets for every dollar of current liabilities, suggesting potential
challenges meeting short-term obligations. A higher ratio would be
preferable for better liquidity.

Profitability Ratios:

 Return on Investment (ROI): Net Income / Total Assets = 1,283 / 45,432

= 2.8%
o Interpretation: This ratio represents the company's ability to generate
profit from its assets. FirstEnergy's ROI is relatively low, indicating limited
profit generation for each dollar invested.
 Profit Margin on Revenues: Net Income / Revenue = 1,283 / 11,132 = 11.5%
o Interpretation: This ratio shows the percentage of each dollar of revenue
that turns into profit. While 11.5% is not low, it's important to compare it to
industry benchmarks and historical trends for FirstEnergy.

Operations Ratio:

 Total Assets Turnover: Revenue / Total Assets = 11,132 / 45,432 = 0.24

o Interpretation: This ratio measures how efficiently FirstEnergy is using its
assets to generate revenue. A lower ratio like 0.24 suggests inefficiencies
or underutilization of assets.
o

The calculated ratios paint a somewhat concerning picture of FirstEnergy's financial

health in 2021. The low liquidity ratio and profitability ratios (ROI and Profit Margin) raise
questions about the company's ability to meet short-term obligations and generate
sufficient profit. The low asset turnover ratio suggests potential inefficiencies in asset
utilization. However, it's important to remember that these are just a few ratios and a
more comprehensive analysis would require examining additional financial data and
industry benchmarks.
When using the quantitative analysis tools from the book I was able to get a current ratio (CR) of 0.73 for
the FirstEnergy Company. This number shows that FirstEnergy has less than $1 in current assets for every
$1 in current liabilities. This suggests that the company might have trouble meeting its short-term
commitments. If you want better liquidity, a bigger amount is ideal. The return on investment (ROI) was
2.8% and this shows how well the company can use its assets to make money. FirstEnergy's ROI is pretty
low, which means that not much money is being made for every dollar spent. The Profit Margin on
Revenues was 11.5% and this shows how much of each dollar of sales is turned into profit. For
FirstEnergy, 11.5% is not a bad rate, but it is important to look at other industry standards and past trends.
Finally, the Total Asset Turnover is 0.24 and this ratio assesses FirstEnergy's revenue-generating
efficiency in relation to its assets. A lower ratio, such as 0.24, indicates inefficiencies or asset
underutilization.