Comparing Goodyear and Cooper Tire's Financial Performance

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July 19th, 2014
Mrs. Upperman, Business Finance Professor
Accounting Department
Stark State College of Technology
6200 Frank Ave N.W.
North Canton, Ohio 44270
Dear Mrs. Upperman,
Our group submits the following “Goodyear Tire and Rubber Company v.s. Cooper Tire
& Rubber” report in the requirements set forth in our syllabus for Business Finance.
This report is to show the strengths and weakness of the two companies compared to the
industry in which they compete. This report will outline the companies’ history, ratio analysis,
current and future outlook, accounting policies, and considerations based on this information. In
order to complete this we used five years of financial reports, each of the company’s investor
websites, Market Watch, and our text books.
We hope this report is as interesting to you as it was for us to research. Thank you for
your time, help, and guidelines to complete this report.
Yours Truly,
Darren Kerr
Mariah Terry
Sara Kelley
Dorothy Johnson-Christian
Heather Johnson

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Goodyear Tire & Rubber Company
V.S.
Cooper Tire & Rubber Company
Prepared for:
Mrs. Upperman
Business Finance
Stark State College of Technology
North Canton, Ohio 44720
Prepared by:
Sara Kelley
Darren Kerr
Dorothy Johnson-Christian
Heather Johnson
Mariah Terry
July 19th, 2014

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TABLE OF CONTENTS
TABLE OF CONTENTS ……………………………………………………………..…………iii
TABLE OF ILLUSTRATIONS …………………………………………………………………v
Logos …………………………………...…………………………………………………v
Figures …………………………………………………………………………………….v
Tables ……………………………………………………………………………………..v
INFORMATIVE SUMMARY …………………………………………………………………..vi
Introduction ………………………………………………………………………………vi
History of the Industry …………………………………………………………………...vi
History of Goodyear Tire & Rubber …………………………………………………….vii
History of Cooper Tire & Rubber ……………………………………………………….vii
Ratio Analysis …………………………………………………………………………...vii
Conclusion ……………………………………………………………………………...viii
Recommendation ……………………………………………………………………….viii
INTRODUCTION ………………………………………………………………………………..1
Background ……………………………………………………………………………….1
Purpose ……………………………………………………………………………………1
Scope ……………………………………………………………………………………...1
HISTORY OF THE INDUSTRY ………………………………………………………………...2
HISTORY OF GOODYEAR TIRE & RUBBER ………………………………………………...5
HISTORY OF COOPER TIRE & RUBBER …………………………………………………….8
RATIO ANALYSIS ……………………………………………………………………………..10
Liquidity Ratios …………………………………………………………………………11
Current Ratio …………………………………………………………………….11
Quick Ratio ……………………………………………………………………...13
Activity Ratios …………………………………………………………………………..14
Inventory Turnover Ratio ……………………………………………………….15
Total Asset Turnover Ratio ……………………………………………………...17
Average Collection Period Ratio ………………………………………………..18
Debt Ratios ………………………………………………………………………………20
Debt Ratio ……………………………………………………………………….21
Profitability Ratios ………………………………………………………………………22
Gross Profit Margin Ratio ……………………………………………………….23
Operating Profit Margin Ratio …………………………………………………..24
Pre-Tax Net Profit Margin Ratio ………………………………………………..25
Return on Total Assets Ratio ……………………………………………………26
Return on Common Equity Ratio ……………………………………………….27
Market Ratios ……………………………………………………………………………28
Price to Earnings Ratio ………………………………………………………….29

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PRESENT AND FUTURE OUTLOOK………………………………………………………... 31
Cooper Tire & Rubber …………………………………………………………………..31
Goodyear Tire & Rubber ………………………………………………………………..33
ACCOUNTING POLICIES …………………………………………………………………….35
Goodyear Tire & Rubber ………………………………………………………………..35
Cooper Tire & Rubber …………………………………………………………………..36
CONCLUSION ………………………………………………………………………….………37
RECOMMENDATIONS ………………………………………………………………………..39
WORKS CITED ………………………………………………………………………………...43
APPENDIX A: FINANCIAL STATEMENTS
Goodyear Tire & Rubber Income Statement ……………………………………………44
Goodyear Tire & Rubber Cash Flow Statement ………………………………………...44
Goodyear Tire & Rubber Balance Sheet ………………………………………………..45
Cooper Tire & Rubber Income Statement ………………………………………………46
Cooper Tire & Rubber Cash Flow Statement …………………………………………...46
Cooper Tire & Rubber Income Statement ………………………………………………47

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LIST OF ILLUSTRATIONS
Logos
Logo 1: Goodyear Tire & Rubber Logo ………………………………………………………….5
Logo 2: Cooper Tire & Rubber Logo …………………………………………………………….8
Figures
Figure 1: Current Ratio Graph …………………………………………………………………..12
Figure 2: Quick Ratio Graph …………………………………………………………………….14
Figure 3: Inventory Turnover Graph …………………………………………………………….17
Figure 4: Total Asset Turnover Graph …………………………………………………………..18
Figure 5: Average Collections Period Graph ……………………………………………………20
Figure 6: Debt Ratio Graph ……………………………………………………………………...22
Figure 7: Gross Profit Margin Ratio Graph ……………………………………………………..24
Figure 8: Operating Profit Margin ………………………………………………………………25
Figure 9: Price to Earnings ……………………………………………………………………...30
Tables
Table 1: Current Ratio Data ……………………………………………………………………..11
Table 2: Quick Ratio Data ………………………………………………………………………13
Table 3: Period End Turnover Ratio Data ………………………………………………………15
Table 3.5: Average Age of Inventory Data ……………………………………………………...16
Table 4: Total Asset Turnover Ratio Data ………………………………………………………17
Table 5: Average Collection Period Data ……………………………………………………….19
Table 6: Debt Ratio Data ………………………………………………………………………..21
Table 7: Gross Profit Margin Ratio Data ………………………………………………………..23
Table 8: Operating Profit Margin Data ………………………………………………………….24
Table 9: Pre-Tax Net Profit Margin Data ……………………………………………………….26
Table 10: Return on Total Assets Data ………………………………………………………….27
Table 11: Return on Common Equity Data ……………………………………………………..28
Table 12: Price to Earnings Ratio Data ………………………………………………………….29
Table 12.5 Earnings per Share Data …………………………………………………………….29

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INFORMATIVE SUMMARY
Introduction
The rubber industry has been around for over a century now and has revolutionized
civilization as we know it. While the content of actual rubber products has changed relatively
little, it has come with the introduction of an extreme range of products: shoes, sports equipment,
chairs, even the buttons on your car keys. We first will give some background history on each
company, giving you an idea of where the company came from and how it grew up. Within our
comparisons of the tire industry, Cooper Tires & Rubber, and Goodyear Tires & Rubber, we will
discuss financial information from each company and the industry to analyze and compare. With
this information, we will be able to discuss each company in great financial detail and be able to
then pick one company to give an overall recommendation about.
History of the Industry
Rubber was discovered and recorded first in the early 1500’s by both Mexico and
England. Made popular by Priestley Co. in England, rubber started being used as a consumer
product. From that stemmed new products; as one idea led to another about the use of the rubber
material, out spawned the tire industry. Even after the introduction of the rubber tire,
advancements continued one after the other. The ease of working with the product, texture,
durability, way it was manufactured, and a wider use of patterned impressions in the rubber
(tread) are just a few examples. Rubber plantations, farms, and groves were just about

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everywhere approaching 1910. Rubber trees began to grow in many varieties and variations on
newly-found rubber tree farms.
History of Goodyear Tire & Rubber
The Goodyear Tire & Rubber Company was established in 1898 by founder Frank A
Seiberling in Akron, Ohio in an old factory building on the Cuyahoga River. Just a few years
after the first sale for the company, they were already expanding into different countries. The
Goodyear blimp, notoriously marked with the wingfoot logo, captured the attention of many and
proved to be a huge success for marketing. 1951 marked the 500 millionth tire produced by
Goodyear Tire & Rubber Company, while one billion in sales allowed for yet another first for
them. Only twelve years would follow before it produced its billionth tire in 1963. Now, the
Goodyear brand is recognizable almost anywhere in the world, from sports to commercial
airliners.
History of Cooper Tire & Rubber
Cooper Tire & Rubber Company began as M and M Manufacturing Company in Akron
Ohio by Claude E. Hart and his brother-in-law in 1914. After purchasing tire companies in
Akron, Ohio, they moved their location to Findlay, Ohio. Cooper dedicated itself during World
War II, and as such proved to be a successful company through difficult times. In 1946, M and
M Manufacturing Company officially became what we know today as Cooper Tire & Rubber.
The company competed in specialty high-performance products but strive its basis on customer
service.

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Ratio Analysis
Each company’s ratios tell a little bit about the financial performance that they are in and
will show a measure of what is going on. By themselves, the ratios can be very misleading, but
when put together and analyzed concisely, is a very powerful tool about a company’s overall
financial “health,” especially when compared to industry norms.
Conclusions
When looking at each company, they each have their strengths and weakness. Cooper
comes out as being the safest, almost boring, company who would be great for a conservative
investor. Goodyear however may entice a prospective employee from its long standing history.
Recommendations
As with anything, nothing is perfect and neither are companies. Recommendations to
Cooper would include being more risky. On the complete opposite end, however, Goodyear
could stand to play it a little safer to pay off debts and decrease expenses. During that time
Goodyear does that, they could generate sales from their name alone.

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INTRODUCTION
This report will compare introduce us to the tire industry and ratio analysis. We decided
to focus our report on Goodyear Tire & Rubber Company, and Cooper Tire & Rubber Company.
We will introduce you to these companies backgrounds, show you the ratios analysis compared
to the industries, present you with current and future outlook, discuss accounting policies, and
make recommendations based on the information presented in this report.
Background
While Goodyear Tire & Rubber has been a historically recognized name when it comes
to tires, Cooper Tire & Rubber has not had its same share of the limelight. However, both of
these companies have impacted our entire economy due to the important nature of tires and the
automotive industry.
Purpose
The goal of our paper is to give the audience an informative background of the two
selected companies and the industry that they are in. Our purpose is to first give historical
background information of the tire industry, Goodyear Tire & Rubber, and Cooper Tire &
Rubber. Analyzing each company’s financial records, we will be able to provide pros and cons to
the present and future outlook, and discuss accounting policies for each company’s finances.
Scope

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The scope of our project used financial reports and ratio analysis of Goodyear Tire &
Rubber Company and Cooper Tire & Rubber Company. We focused this search to 2009-2014.
We used liquidity, activity, profitability, debt and market ratios to complete our analysis.
HISTORY OF THE INDUSTRY
Rubber in its natural state is a solid material that is extracted from trees and plants. Most
of this latex substance comes from a rubber tree in Brazil. A tap is put on the tree to pull the
secretion from it. Tree farms known as rubber groves became a notable business in the Amazon.
This new industry eventually brought about the “rubber Boom”. People from all over the world
would find their way to Brazil to capitalize of this discovery.
Rubber was discovered and recorded first in the early 1500’s: both with Mexico and in
England. The Mexicans where reportedly seen using an elastic ball made of a rubbery material,
while the English used rubber to make erasers. Erasers were the first rubber product. The French
engineer Charles de la Condamine was one of the first to conduct scientific studies of rubber in
1735. He concluded that the substance was simply a condensed resinous oil of sorts. Magellan, a
relative of the famous Portuguese navigator, thought of the bright idea to create erasers with this.
The substance became known as India Rubber once it was made popular by Priestley Co. in
England.
Rubber was also used for jar making, wine shipping, and leather borrachas. Borracha is
the Portuguese word for rubber. It was also used for tubing and flexibility by craftsmen,
goldsmiths, herbalists, and more. As it is very useful today, it changed life as they knew it then.
Rubber treads were produced in 1820 Britain for clothing. England was grateful for snow
boots, while America was getting use to waterproof. This Era was referred to as Rubber Fever.

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Sawyer Hancock created the water proof “rain coat” that is still very much so a part of our lives
today. He was a top manufacturer in 1815. Rolling, cutting, and pressing rubber was his
innovation. He invented the machine to do this on an industrial level and introduced the very
crucial heat level needed for pressing this way.
In 1840, The Goodyear Tire & Rubber Company successfully mastered the vulcanization
of rubber, sadly after the Rosburg Factory failed to succeed; due to the lack thereof. Rosburg
products such as Mackintosh’s coat would become brittle, and gum together in the sun due to the
natural state of the substance.
Benzene was discovered by Mackintosh and used as a solvent. As new and innovative
knowledge grew chipping and heating was added. Elastic balls were beginning to be
manufactured.
Two years after The Goodyear Tire and Rubber Company pumped the industry with its
discovery, Hancock came across the vulcanized rubber. His discovery of the Goodyear secret
was his map to success and wealth. This finding made the rubber industry extremely competitive.
The pneumatic tire was created in 1845 by R.W Thompson. It had an inner tube and textured
tread that was even.
Solid rubber was created in 1869, and then hollow rubber. After this growth of innovation
the tire as it was physically, was totally recreated. Polymer was introduced. Tires were
polymerize isoprene around 1881. Bicycle tires were adapted to the new tire standards. In 1895
Michelin was responsible for this new product.
The raw composition of rubber was synthesized soon after this in Russia, and by
Germans, but raw rubber performed much better.

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During the realization of growth from the industry, many were more than excited to
become a part of what these companies were tapped into. Rubber was exported around the world
to supply the new age. Like with anything striking gold, this too would attract notable ambition.
The British smuggled rubber tree seeds from the Amazon to satisfy their growing desire to be a
part of. The London Botanical Gardens would be the fine recipient of these fruits in 1876.
Rubber plantations, farms, and groves where just about everywhere approaching 1910.
Rubber trees began to grow in many varieties and variations. The industry, like its source
continued to follow as it continued to experience growth in abundant measures. As erasers
became tubes, tubes became boots, boots became coats, coats became tires, and tires became
Goodyear, and Cooper Tire companies. Tire companies would become an industry that changed
the world forever, the rubber industry.

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HISTORY OF GOODYEAR TIRE & RUBBER
The Goodyear Tire & Rubber Company was established in 1898 by founder Frank A
Seiberling. Its home was an old strawboard factory building on the Cuyahoga River in Akron
Ohio. Seiberling took a loan from a family member to purchase the building before he even
knew what product he would sell. He eventually settled on rubber products such as horseshoe
pads, tires for carriages and bicycles, sealing rings for canning, poker chips, and fire hoses.
Goodyear would soon make its first month’s sales, its first payroll, and begin its history of being
the first at many things within the industry. His original land down payment of 3,500 dollars
would soon pay off once he incorporated with a capital stock of 100,000 dollars.
Goodyear Tire & Rubber Company made sales of 8,246 dollars in its very first month of
operation. It was off to a great start making its very first payroll at 217.86 dollars. Seiberling
made a wise agreement of repayment for his loan for the building expense so he was already
profiting in business.
Only twelve years after making its first sale, the company embarked on its first expansion
beyond the United States of America. Goodyear opened a plant in Bowmansville, Canada. After
the 1910 growth from expansion was obvious. One of the major contributors of capital to this
extreme gaining was the introduction of the first Goodyear Blimp. In 1912, The Goodyear
Wingfoot Tire and Rubber Company presented the Goodyear blimp to the world. The blimp is an
aircraft that Goodyear used in large part to advertise its name. As the Name Goodyear floated
about the skis people took notice to the Wingfoot logo that accompanied it. This logo was
Logo 1: Goodyear Tire & Rubber Logo

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simply a foot with wing attached. The Goodyear blimp is still today using the sky as an
advertising medium to the many companies known by sight under the Goodyear name. The tire
and rubber company became the world’s largest in the industry in 1926 when its sales exceeded
230,000. Goodyear set a trend of innovation, investing, acquisition, and therefore growth. The
company consistently acquired new ground by developing the latest technology on the market,
and collaborating with the most relevant companies existing in the industry.
1951 marked the 500 millionth tire produced by Goodyear Tire & Rubber Company,
while one billion in sales allowed for yet another first for them. Only twelve years would follow
before it produced its billionth tire in 1963.
One of Goodyear’s great innovations was the carbon composite disk brake rotors of 1971.
As innovation continued and partnerships grew, General Motors named Goodyear as their
exclusive supplier of poly-v serpentine automotive belts on their Chevrolet Corvette. Two years
later Goodyear increased its synthetic rubber capacity with a 64 million dollar investment. A new
specialty polymer facility was developed in Beaumont Texas.
As the World Wide Web changed business forever, Goodyear took this as another
opportunity to become a first in the industry. In 1994 the company is the first in its industry to
sell electronics on its website. This idea was part of a 20 million dollar joint venture with Indo
Gold Lion Hose Company. The next year it acquired TC Debica Tire Manufacturing Company
of Poland by majority interest. Soon after in 1999, Goodyear Tire & Rubber Company’s never
ending exploration of possibilities established it as the world’s largest tire company. During this
time the company built a 1 billion dollar alliance with the well-known Sumitomo Rubber
Industrial Tires LTD. A grand 50th anniversary was reached in 1994 for Goodyear and its

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longtime partner NASCAR Racing. NASCAR was one of the many industry leading brands that
the company has partnered with over its notable history.
Today Goodyear continues to establish itself by name and more, as one of the most
notable companies worldwide in the tire and rubber industry.

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HISTORY OF COOPER TIRE & RUBBER COMPANY
Logo 2: Cooper Tire & Rubber Co. Logo
Cooper Tire & Rubber Company began as M and M Manufacturing Company in Akron Ohio.
Claude E. Hart and his brother in law John F. Schaefer purchased the company around 1914
before purchasing a second company just one year after. The M and M company produced tire
cement, tire patches, and repair kits for tires. The tire repair company that they purchased after M
and M was Giant Tire & Rubber Company of Akron Ohio. This was a tire rebuilding company.
They moved the company to Findlay Ohio shortly after purchase.
As many other companies did during World War II, Cooper dedicated itself to producing
military goods for the American Government. Growth would come to the company the same as
others through acquisitions, investments, and expansion. Although the company does not make
claim to innovation, it proved it ability to compete through tough times.
The company officially changed its name in 1946, the M and M Manufacturing
Company, and Giant Tire & Rubber Company became The Cooper Tire & Rubber Company.
Cooper hit the New York stock exchange in July of 1960. In 1991 the company reached one
billion dollars in sales. Cooper Tire & Rubber Company reached nine countries by this time.
National expansion was critical to its success and ability to compete in the industry. Building its
product line was just as important.

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Like its counterparts, Cooper became a leading name in specialty parts such as ultra-high
performance tires. The company also entered ventures with other companies such as Kenda
Rubber Industrial Company LTD. The investment accounted for the development in Shanghai
China. There the company produced specialty tires. Soon after in 2004 Cooper sold its
automotive company for 1.2 billion dollars. This capital was used to invest into 11 percent of
Kumbo Tire, Oliver Rubber Company, and 51 percent of Cooper Chengshan Passenger Tire
Company LTD.
While other companies focused on innovation, Cooper focused on customer service, and
relationships. It claims a friendship as the number one brand in China. Cooper continues to seek
growth and maintain its longtime friends.

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RATIO ANALYSIS
We are now going to compare and analyze Goodyear Tire and Rubber Company to
Cooper Tire and Rubber Company. The information we will be using to compare them was
obtained from each companies’ Balance Sheet, Income Statement and Statement of Cash Flows,
prepared in accordance of the generally accepted accounting principles. The data acquired from
the companies’ financial statements will be compared to industry averages. Information on
industry averages was found from Market Watch and Venture Line, reputable investment and
finance websites. We will be comparing the companies’ and industry’s financial ratios at the end
of each of their fiscal periods, a five year range of 2009 to 2013.
We will be analyzing the financials to describe each company’s liquidity position,
profitability and evaluate positive and negative trends. Five groups of financial ratios will be
used to analyze the companies and industry. The first group of ratios we will be discussing are
liquidity ratios. Liquidity ratios are used to determine the ability of an entity to pay its current
debts as well as meeting future commitments. These ratios are used by investors and lenders to
determine if a company will survive.
Next, we will discuss activity ratios. Activity ratios measure how efficiently a company is
using its assets, like accounts receivable or inventory. It is important to know how quickly a
company can convert assets into cash in order to cover liabilities. Debt ratios measure a
companies’ financial risk, presented as a percentage of its assets that have been financed by debt.
In order to evaluate how well the companies operate, we will be using profitability ratios.
Profitability ratios are used to compare earnings to expenses and other costs the companies incur
during a fiscal period. Finally, we will use market ratios to discuss stock prices and the return
and value in investing in both companies. Creditors, managers and current and future investors

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rely on financial ratios to evaluate a company’s current condition. Ratios are an important tool
used in determining strengths and weaknesses within a company or even in a particular industry.
Liquidity Ratios
In accounting, liquidity is described as the ability of a company to satisfy its debts as and
when they come due. Simply stated, liquidity ratios measure a company’s ability to pay its
obligations. These are beneficial to lenders, investors and creditors in order to determine if and
for how long a company will survive. In detail, we will describe two liquidity ratios: the current
ratio and the quick ratio. We will be using these to measure and to analyze the liquidity of both
companies mentioned as compared to others in the tire and rubber industry.
Current Ratio
The current ratio can be calculated by dividing a company’s current assets by its current
liabilities. “The current ratio is one of the most commonly cited financial ratios, measuring the
firm’s ability to meet its short-term obligations” (Gitman, 65). A high current ratio normally
indicates a higher degree of liquidity.
Table 1: Current Ratio Data
2009 2010 2011 2012 2013
Goodyear 7,225/4,095
=1.76
8,045/5,307
=1.52
9,812/5,929
=1.65
8,498/5,322
=1.60
8,644/5,025
=1.72
Cooper 1,131.8/636.3
=1.78
1,340.2/694.3
=1.93
1,264/651
=1.94
1,449.7/655.1
=2.21
1,454.8/564.6
=2.58
Industry 1.10 1.40 1.30 1.30 1.50
(Dollar figures are in thousands)

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When we look at both Goodyear and Cooper Tire’s current ratios, we can see that they
both perform above the industry standard over the past five years. Both companies appear to be
in good short-term financial health. Cooper has been steadily increasing from 2009 to present. A
high current ratio like Cooper Tire in 2013 could possibly signify inefficiencies and
underutilized assets. On the other hand, Goodyear, although stable, has been decreasing since
2009 until a slight increase in 2013 but still remaining above the industry standard. This is due to
Goodyear having more current liabilities than assets.
Figure 1: Current Ratio Graphical Representation
-
0.50
1.00
1.50
2.00
2.50
3.00
2009 2010 2011 2012 2013
Current Ratio
Goodyear Cooper Industry

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Quick Ratio
The quick ratio, also called the acid-test ratio, is very similar to the current ratio. It can be
computed like the current ratio but excluding inventory from current assets. Inventory is not
included because it is considered the least liquid asset. This is because inventory is generally sold
on credit and transitions to accounts receivable before it can be converted to cash. The quick
ratio is a preferable method to evaluate liquidity in companies’ whose inventory is not liquid.
The quick ratio can also be interpreted like the current ratio. The higher the ratio, the greater the
financial position of the company. The rubber and tire industry relies heavily on inventory and
custom, special orders as their primary current assets. We believe the quick ratio will give a more
accurate portrayal of Goodyear and Cooper Tire’s liquidity.
Table 2: Quick Ratio Data
2009 2010 2011 2012 2013
Goodyear (7,225-
2,443)/4,095
=1.17
(8,045-
2,977)/5,307
=0.95
(9,812-
3,856)/5,929
=1.00
(8,498-
3,250)/5,322
=0.99
(8,644-
2,816)/5,025
=1.16
Cooper (1,131.8-
298.4)/636.3
=1.31
(1,340.2-
386.8)/694.3
=1.37
(1,264-
465.4)/651
=1.23
(1,449.7-
561.9)/655.1
=1.36
(1,454.8-
517.2)/564.6
=1.66
Industry 0.7 0.9 0.9 0.9 1
(Dollar amounts measured in thousands)

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As shown in Table 2, both Goodyear and Cooper are performing above the industry average.
However, both companies have been declining from 2009 to 2012, increasing in 2013. A
decrease in inventory by 2013 by both companies’ appears to be the cause of the increase in their
quick ratio in 2013.
Figure 2: Quick Ratio Graphical Representation
Both the current and quick ratio implies that Goodyear and Cooper are in a good financial
position. This means that both companies should be able to easily convert their assets to cash in
order to fulfill their short-term obligations. Even though Goodyear experienced a decline over
four of the five years analyzed, this is not necessarily a bad sign. Both companies have
performed above the industry averages.
Activity Ratios
Activity ratios are a measure of how quickly accounts can be converted to cash, both
incoming and outgoing. “In a sense, activity ratios measure how efficiently a firm operates along
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2009 2010 2011 2012 2013
Quick Ratio

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a variety of dimensions such as inventory management, disbursements and collections” (Gitman,
68). These ratios normally represent a number of days. In our analysis, we will be discussing
three activity ratios: Inventory Turnover, Total Assets and Average Collection Period.
Inventory Turnover
The inventory turnover ratio can be defined as “a ratio showing how many times a
company’s inventory is sold and replaced over a period” (Investopedia). This ratio is computed
by dividing a firm’s cost of goods sold by its inventory and is only useful when comparing
values to companies in the same industry. This ratio can also be converted into the average age
of inventory by dividing it into 365. The inventory turnover ratio is important when evaluating a
company because it shows how quickly goods are being moved and how efficient operations.
Table 3: Period End Inventory Turnover Ratio Data
2009 2010 2011 2012 2013
Goodyear 13,676/2,443
=5.60
15,437/2,977
=5.19
18,771/3,856
=4.87
17,142/3,250
=5.27
15,399/2,816
=5.47
Cooper 2,360/298.4
=7.91
2,940.3/386.8
=7.60
3,562.8/465.4
=7.66
3,546.6/561.9
=6.31
2,923/517.2
=5.65
Industry 5.30 5.60 5.90 5.90 5.90

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Table 3.5: Average Age of Inventory Data
2009 2010 2011 2012 2013
Goodyear 365/5.60
=65.2
365/5.19
=70.3
365/4.87
=74.9
365/5.27
=69.3
365/5.47
=66.7
Cooper 365/7.91
=46.1
365/7.60
=48
365/7.66
=47.7
365/6.31
=57.8
365/5.65
=64.6
Industry 365/5.3
=68.9
365/5.60
=65.2
365/5.90
=61.2
365/5.90
=61.2
365/5.90
=61.2
(Ending values are measurements of days)
As shown in Table 3 and Table 3.5 a lower inventory turnover ratio results in a higher
average age of inventory. A high inventory ratio and low average age of inventory is desirable
because it shows that a company is moving inventory quickly. Although below average at times,
Goodyear’s inventory turnover has been more consistent with the industry average. While
Goodyear has remained stable over the past five years, Cooper Tire’s inventory turnover rate has
been decreasing significantly since 2011. The company ended 2009 performing well above
industry standards but has dipped below average during 2013. This is due largely to an increase
in their Cost of Goods Sold.

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Figure 3: Inventory Turnover Graphical Representation
Total Asset Turnover
“The total asset turnover indicates the efficiency with which the firm uses its assets to
generate sales” (Gitman, 70). We calculate this ratio by dividing the companies’ sales in dollars
by its total assets in dollars. A high total asset turnover ratio is preferable because it illustrates
the financial efficiency of a company.
Table 4: Total Asset TurnoverRatio Data
2009 2010 2011 2012 2013
Goodyear 16,301/14,410
=1.13
18,832/15,630
=1.20
22,767/17,629
=1.29
20,992/16,973
=1.24
19,540/17,527
=1.11
Cooper 2,779/2,100.3
=1.32
3,361/2,305.5
=1.46
3,907.8/2,509.9
=1.56
4,200.8/2,801.2
=1.50
3,439.2/2,738.1
=1.26
Industry 1.00 1.10 1.20 1.20 1.10
-
2.00
4.00
6.00
8.00
10.00
2009 2010 2011 2012 2013
Inventory Turnover (Period End)

18
As we display in Table 4, both companies performed above industry averages all five
years. Sales for Goodyear peaked in 2011, giving them a high total asset turnover ratio for the
end of that year, following a decline due to a decrease in sales. Cooper followed a similar trend,
with sales peaking in 2012 and gradual decline in the periods following. Regardless of the
decline, both companies continue to outperform others in the industry.
Figure 4: Total Asset Turnover Graphical Representation
Average Collection Period
The average collection period ratio is used to measure the amount of time needed to
collect accounts receivable. We can find this value by dividing accounts receivable by sales and
then into 365. This ratio “is useful in evaluating credit and collection policies” (Gitman, 68) and
a higher ratio can indicate inefficiencies in a company’s collection methods. A lower ratio is
more acceptable but must be compared to other factors like the companies’ credit terms in order
to accurately measure efficiency.
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2009 2010 2011 2012 2013
Total Asset Turnover

19
Table 5: Average Collection Period Data
2009 2010 2011 2012 2013
Goodyear 365*
(2,540/16,301)
=56.87
365*
(2,736/18,832)
=53.03
365*
(2,849/22,767)
=45.68
365*
(2,563/20,992)
=44.56
365*
(2,435/19,540)
=45.68
Cooper 365*
(367/2,779)
=48.20
365*
(483.7/3,361)
=52.53
365*
(509.3/3,907.8)
=47.57
365*
(468.4/4,200.8)
=40.70
365*
(477/3,439.2)
=50.62
Industry 59.7 62.8 56.3 53.6 55.7
As illustrated in Table 5, we found that both companies’ have lower average collection
ratios than the industry over the five year range. In this situation, being below average is a good
sign for both companies because it means their collection time for receivables is quicker. This is
also a good indicator of how fast both companies can convert their assets into cash. Goodyear
continued to improve its average collection time until 2013 when it increased by about 1 day, an
insignificant increase. Cooper fluctuated throughout the years which may indicate the need to
reevaluate credit collection policies.

20
Figure 5: Average Collection Period Graphical Representation
After evaluating these three ratios, we are able to determine that both Goodyear and
Cooper are able to convert their assets and receivables into cash quickly and more efficiently
than others in the industry. Both companies experienced an inability to turnover inventory as
efficiently through the years, which may be due to increased prices for gasoline and automobiles.
DEBT RATIOS
Debt ratios measure the debt position of a company and illustrates the amount of others
money being used to make a profit. “With increased debt comes greater risk as well as higher
potential return…the greater the financial leverage, the greater the potential risk and return”
(Gitman, 71). This ratio is most important to current and future shareholders. Because a company
must pay its creditors first, shareholders need to know that a company can satisfy their debts
before investing. When making our analysis, we will be using only one debt ratio: the basic debt
ratio. Another common ratio used is the Times Interest Earned Ratio, which we will not be
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
2009 2010 2011 2012 2013
Average Collection Period

21
illustrating due to the fact that both companies reported zero interest paid in the years ending
2009 to 2013.
DEBT RATIO
“The debt ratio compares a company’s total debt to its total assets, which is used to gain a
general idea of the amount of leverage being used by a company” (Investopedia, Loth). We have
calculated the debt ratio by dividing each of the company’s total liabilities by their total assets. A
high percentage indicated that a greater amount of others’ money being used to turn a profit. This
ratio illustrates what percentage of the company’s assets are financed with debt.
Table 6: Debt Ratio Data
2009 2010 2011 2012 2013
Goodyea
r
13,675/14,410
=94.90%
14,986/15,630
=95.88%
16,880/17,629
=95.75%
16,603/16,973
=97.82%
16,603/17,527
=94.73%
Cooper 1,769.5/2,100.
3
=84.25%
1,844.7/2,305.
5
=80.01%
1,932.1/2,509.
9
=76.98%
2,043.5/2,801.
2
=72.95%
2,043.5/2,738.
1
=74.63%
Industry 80% 70% 70% 70% 70%
Based on industry averages, companies in this industry finance almost ¾ of their assets
with debt. Neither Goodyear nor Cooper has performed below this average. Goodyear has
consistently financed almost all of their assets with debt. Although they have high percentages,
Cooper has maintained debt ratios closer to the industry average. Both companies should

22
consider decreasing their liabilities in order to achieve a lower debt ratio. With such a high
degree of debt, shareholders may see high returns with each company but must be aware of the
great risk in investing.
Figure 6: Debt Ratio Graphical Representation
PROFITABILITY RATIOS
“Without profits, a firm could attract outside capital. Owners, creditors, and management
pay close attention to boosting profits because of the great importance the market places on
earnings” (Gitman, 71). High profitability ratios are a good indicator that a company is
performing well. These ratios measure how a company can generate profits compared to its
expenses and costs. For our analysis, we will be using five profitability ratios: gross profit
margin, operating profit margin, pre-tax profit margin, return on total assets and return on
common equity.
0.00%
20.00%
40.00%
60.00%
80.00%
100.00%
120.00%
2009 2010 2011 2012 2013
Debt Ratio

23
Gross Profit Margin Ratio
The gross profit margin is expressed as a percentage of sales dollars that remain after
goods have been paid for. Gross profits are calculated by subtracting cost of goods sold from
sales. We have calculated the gross profit margin ratio by dividing gross profits by total sales.
Table 7: Gross Profit Margin Ratio Data
2009 2010 2011 2012 2013
Goodyear (16,301-
13,676)/16,30
1
=16.1%
(18,832-
15,437)/18,83
2
=18.03%
(22,767-
18,771)/22,767
=17.55%
(20,992-
17,142)/20,992
=18.34%
(19,540-
15,399)/19,54
0
=21.19%
Cooper (2,779-
2,360)/2,779
=15.08%
(3,361-
2,940.3)/3,361
=12.52%
(3,907.8-
3,562.8)/3,907.
8
=8.83%
(4,200.8-
3,546.6)/4,200.
8
=15.57%
(3,439.2-
2,923)/3,439.2
=15.01%
Industry 23.7% 23.9% 23% 23.5% 25.8%
Based on the data in Table 7, both Goodyear and Cooper have low gross profit margins
and are operating below industry averages during the periods analyzed. Goodyear managed to
increase gross profit margins throughout the periods but Cooper sunk below 10% in 2011 and
gradually increased to 15% by 2013. These low ratios may be due to inflation and rising costs.
Finding ways to decrease expenses would be suggested to both companies. Also, an increase in
sales for both companies would decrease the gross profit margin ratio.

24
Figure 7: Gross Profit Margin Ratio Graphical Representation
Operating Profit Margin Ratio
The operating profit margin ratio is similar to the gross profit margin ratio with the
exception that the operating profit margin excludes interest, tax and preferred stock dividends.
This ratio is considered the percentage of “pure profits” earned on each sales dollar. We
calculated this ratio by dividing the operating profits by sales.
Table 8: Operating Profit Margin Ratio Data
2009 2010 2011 2012 2013
Goodyear -26/16,301
=-.16%
399/18,332
=2.12%
943/22,767
=4.14%
781/20,992
=3.72%
1,274/19,540
=6.52%
Cooper 115.5/2,779
=4.16%
159.8/3,361
=4.75%
163.3/3,907.8
=4.18%
396.9/4,200.8
=9.45%
240.7/3,439.2
=7%
Industry -0.4% 4.5% 6.5% 7.2% 8.7%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
2009 2010 2011 2012 2013
Gross Profit Margin

25
Both companies have a low operating profit margin by industry standards. Goodyear was
continuously below industry average with the exception of 2009, which was still reported as a
negative operating profit margin. Cooper was more consistent with industry averages. A higher
operating profit margin is most attractive to investors. Both Cooper and Goodyear can improve
this ratio by an increase in sales dollars as well as a decrease in expenses. We think both
companies should reorganize operating procedures in order to achieve a higher percentage per
sales dollar on their profits.
Figure 8: Operating Profit Margin Graphical Representation
Pre-Tax Net Profit Margin
The net profit margin is the percentage of each sales dollar remaining after all expenses
and costs. Like the gross profit margin and operating profit margin ratios, the higher the
percentage, the better. Net profit margin is calculated by dividing pre-tax income by sales.
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
2009 2010 2011 2012 2013
Operating Profit Margin

26
Table 9: Pre-Tax Net Profit Margin
2009 2010 2011 2012 2013
Goodyear -357/16,301
=-2.19%
8/18,832
=0.04%
618/22,767
=2.71%
440/20,992
=2.10%
813/19,540
=4.16%
Cooper 115.5/2,779
=4.16%
159.8/3,361
=4.75%
134.1/3,907.8
=3.43%
368.5/4,200.8
=8.77%
213/3,439.2
=6.19%
Industry -2.7% 2.6% 4.9% 6.1% 7.1%
Although Goodyear’s net profit margin continues to rise, the company failed to rate
above industry averages. This is due to low pre-tax income in relation to their sales. Using this
ratio, Cooper would be a more attractive investment for stockholders because they never reported
negative net profits. Even though they sometimes dipped below the average, Cooper’s earnings
available to stockholders consistently rated above Goodyear’s’.
Return on Total Assets
Also named as the return on investment, this ratio measures effectiveness. The ratio
illustrated how well management can turn profits with the assets available to them. This is
expressed as the percentage of money earned on each dollar of asset investment and can be
calculated by dividing the companies’ net income by their total net assets.

27
Table 10: Return on Total Assets Data
2009 2010 2011 2012 2013
=-2.60%
-216/15,630
=-1.38%
321/17,629
=1.82%
183/16,973
=1.08%
600/17,527
=3.42%
Cooper 61.7/2,100.3
=2.94%
140.5/2,305.5
6.09%
253.5/2,509.9
=10.10%
220.3/2,801.2
=7.86
111/2,738.1
=4.05%
Industry -3.3% 0.9% 3.9% 4.8% 5.8%
Never managing to raise above already low industry standards, Goodyear lost money on
its investments because of a net loss in 2009 and 2010. Even with an increase in 2013, the
company had an extremely low rate of return on investments. Cooper reported positive returns
for all periods shown, some periods were significantly higher than what the industry as a whole
was experiencing. Only recently has the company fell below the average return on total assets
because of a decrease in their net income.
Return on Common Equity
The higher the return, the happier the owners of a company are. The return on common
equity measures the percentage of money earned on each dollar invested. We found the return on
common equity by dividing net income by the shareholder’s equity. In order to attract more
investors, this ratio should be higher.

28
Table 11: Return on Common Equity Data
2009 2010 2011 2012 2013
Goodyear -375/735
=-15.02%
-216/644
=-33.54%
321/249
=128.92%
183/-130
=-140.77%
660/1,106
=54.25%
Cooper 61.7/330.8
=18.65%
140.5/460.8
=30.49%
253.5/577.8
=43.87%
220.3/757.6
=29.08%
111/990.9
=11.20%
Industry -15.40% 3.6% 15.3% 17.9% 18%
The industry experienced growth in return on common equity during the periods
reported. Often significantly above the industry average, Cooper appears to be a safer
investment. Unlike Goodyear, Cooper never reported negative return on common equity. As
shown in Table 11, Goodyear has proven to be both a profitable and extremely risky investment
for stockholders due to a negative net income in 2009 and 2010, followed by a significant
increase in net income by 2013.
MARKET RATIOS
Market “ratios give insight into how investors in the marketplace feel the firm is doing in
terms of risk and return” (Gitman, 77). These ratios are used to determine how investors feel a
company is going to perform in the future. We are going to consider one market ratio in our
analysis, the price to earnings ratio. Another common market ratio is the market to book ratio.
Because industry averages are not generally available for this ratio, we will not be including it in
our comparison.

29
Price to Earnings
The price to earnings ratio is a commonly used measurement to value how much
investors will pay for each dollar of a company’s earnings. This ratio can be found by dividing
the market price per share of common stock by earnings per share. We found historical earnings
per share and stock price data on Market Watch and Morning Star investment websites.
Table 12: Price to Earnings Ratio Data
2009 2010 2011 2012 2013
Goodyear 14.1/-1.55
=-9.10
11.85/-0.89
=-13.31
14.17/1.32
=10.73
13.81/0.75
=18.41
23.85/2.44
=9.77
Cooper 20.05/0.87
=23.05
23.58/2.29
=10.30
14.01/4.08
=3.43
25.36/3.52
=7.20
24.04/1.75
=13.74
Industry -11.9 49.3 9.3 11 12.9
Table 12.5: Earnings per Share Data
2009 2010 2011 2012 2013
Goodyear -1.55 -0.89 1.32 0.75 2.44
Cooper 0.87 2.29 4.08 3.52 1.75
Both companies’ saw considerable growth in their price to earnings ratio, especially
Goodyear who saw negative dollars being paid per one dollar of earnings. This low P/E ratio is
due to a low stock price and the amount of money being paid out for their stocks. On average,

30
both companies had price to earnings ratios below industry standards. We do not think this is
primarily due to investor’s lack of confidence in these companies. Considering the decline of the
automobile industry in America during these periods, the increase in price to earnings ratio for
both companies illustrated that investors are still willing to take a risk with these firms.
Figure 9: Price to Earnings Graphical Representation
(20.00)
(10.00)
-
10.00
20.00
30.00
40.00
50.00
60.00
2009 2010 2011 2012 2013
Price to Earnings

31
PRESENT & FUTURE OUTLOOK
COOPER TIRE & RUBBER COMPANY
Cooper Tire & Rubber Company had one impressive 2013. They reported $241 million
dollars in operating profits last year. That was one of their second best records in the companies
one hundred years of producing tires. Coopers financials show that they held cash and cash
equivalents of $398 million dollars, and had substantial amounts of inventory to meet their
customers’ needs coming into the first quarter of 2014. Cooper Tire & Rubber Company is
always focused on improving their brand and making new and unique products to supply to
customers. In 2013, they tested over eighty-one millions miles on their products. This all comes
with a cost to the company. Cooper recorded $51.1 million dollars in research and capital
expenditures. All companies have their fair share of issues, and this company was no exception
to that. They announced in June that they were merging with Apollo Tyres, a company based in
India. Cooper Chengshan Tire (CCT) was not happy with this announcement and stopped
producing units, and withheld business and financial information. These issues caused Cooper
Tire to have issues with cash flows, their ability to report on time, and sometimes even their
financial position. Net sales for the company were recorded at $3.439 million dollars, which for
the company was a decrease from 2012 of $762 million dollars. Chengshan China Tire was
responsible for $226 million dollars of their decrease in net sales due to their labor strike, and a
decrease in the operating profits. Cooper Tire & Rubber Company announced, on December 31st,
that they were no longer merging with Apollo Tyres. They had 2,117 common stockholders
when they ended 2013 and have consecutively paid dividends since the year 1973.
Looking forward into 2014, Coopers’ main focus is to resolve issues with Cooper
Chengshan Tire. They reported that they had made a deal with them at the end of January, and

32
that they would stay focused on this global market. Their first quarterly reports show $81 million
dollars of operating profit (a second best based on quarterly statements) and $796 million in net
sales so far. Cooper reports a strong balance sheet with $336 million in cash and cash
equivalents. As Cooper continues forward they are focusing their pursuits on globalization,
mostly focused on China. While Cooper Tire & Rubber Company continues to expand we can
only hope their profits will increase and they can maximize shareholders wealth.

33
GOODYEAR TIRE & RUBBER COMPANY
For one of the leading tire manufacturers, the present outlook for Goodyear Tire &
Rubber look to be promising, although only slow and steadily improving. In 2013, the company
had shut down production in Amiens, France due to high costs and weakening markets in the
farm tire business. The shut-down is a result of the company’s cost lowering and savings strategy
that is set in place, planned on saving the company approximately $40 million in 2014. Also in
the fourth quarter of 2013, the reinstatement of quarterly dividends was placed into effect.
Although they faced lower business in Australia, who is a major contributor to the region, their
Asia-Pacific region delivered record earnings of $308 million. Their entry to the commercial
truck business in China has proven to be a great business venture, from 2012 to 2013, operating
income increased 18.9% from $259 million. The business in Latin America looks promising as
new branded products that were being sold were very popular with customers.
The cost lowering and savings strategy has completely restored business in North
America. In 2009, Goodyear lost $305 million. By diligent cost control, it has made a $1 billion
turnaround just within four years. Part of this came from a competitive edge the company had by
reaching a labor contract with the United Steelworkers which takes effect until 2017. The
company was able to reach a major milestone to help increase financial transparency and
decrease the need for outside debt financing when new hourly U.S. pension plans were fully
funded by the company. Also in North America, Goodyear finished with eighteen consecutive
quarters of year-over-year earnings improvements and seven straight quarters of at least 5
percent earnings-to-sales.

34
Amazingly, operating income increased by 27% over the past year to achieve the highest
level in Goodyear’s 115 year history. They delivered at least $1.2 billion in segment operating
income, which was also another first for the company. Compared to 2012, 2013 had net income
of $629 million compared to $212 million.
Continuing with their cost reduction and growth plan, Goodyear Tire & Rubber’s future
outlook appears to be improving. In proof that they have been growing financially by reinstating
the quarterly dividends, company milestones met and records beat, goals set to increase segment
operating income 10 to 15 percent each year seem to be a good outlook. Also with the
manufacturing halt and the exit of the fading farm tire market in Amiens, France, the savings
should prove to be a good move on the company’s part. The company’s liquidity position should
prove adequate to fund the needs of the company, including new product lines, with an increase
sale volume.

35
ACCOUNTING POLICIES
The Goodyear Tire & Rubber Co. and Cooper Tire & Rubber Company are publicly traded
companies and must follow General Accepted Accounting Principles, known as GAAP. These
principles are required to be used when preparing financial reports. The goal of GAAP is to
assist companies in preparing useful reports for investors, creditors, and other users in making
well informed financial decisions.
These companies are also required by The Securities and Exchange Commission (SEC) to
complete a 10Q and a 10K. The 10K is an overview of the company’s business and financial
condition and also includes audited financial statements; this report must be filed with the SEC
within 90 days after the close of their fiscal year.
The Financial Accounting Standard Board (FASB) issued a standards update, 2013-02, in
February 2013. This update requires a new disclosure for items reclassified out of accumulated
other comprehensive income. The standard states that the disclosure should include the total
change in each component of other comprehensive income which would include items such as
unrealized gains or losses on available for sale securities. The disclosure must state the income
tax benefit or expense recognized to each component of other comprehensive income and
reclassification adjustments.
Goodyear Tire & Rubber
Goodyear announced in September 2013 the reinstatement of a $0.05 per share quarterly
stock dividend. The first dividend payment was declared on December 31, 2013. There are
currently 17,905 record holders of the 247 plus million shares of common stock.

36
Early in 2013 Goodyear hit a major milestone in their company’s history when they fully
funded their hourly U.S. pension plans. They reached this goal by using cash generated from
operations instead of using debt.
In the first quarter of 2014, Goodyear closed a manufacturing facility in Amiens, France.
They are estimating a cost savings of $75 million from closing this facility and exiting the farm
tire business in Europe, Middle East and Africa in 2014.
Cooper Tire & Rubber Company
Cooper takes great pride in the fact that they have paid common stock dividends on a
quarterly basis for more than forty years. On May 9, 2014, they declared their 169th consecutive
quarterly dividend. The dividend will pay 10.5 cent per share on June 2nd.
As previously mentioned, Cooper announced on June 12, 2013 the planned merger with
Apollo Tyres Ltd, an India based company, for an all-cash transaction at approximately $2.5
billion; however the company terminated the agreement on December 30, 2013.
Cooper uses Last in First out (LIFO) in North America inventory valuation, however, in
international tire operation segments they use First in First out (FIFO). Inventory balances are
at their highest during the first half of the year but decline in the second half as sales increase.

37
CONCLUSION
When looking at liquidity you want to see that a company has the ability to pay
their short-term obligations. Both Goodyear & Cooper are above industry standards when
looking at their current and quick ratio, meaning they are both good from investing stand points
because they are able to pay their short-term obligations.
Activity ratios measure how quickly accounts are turned into sales, or as we like to see it,
cash. When comparing the company’s inventory turnover average, over the past five years,
Cooper came in on top with an average of 52.8 days, 10.7 days over the industry average, 16.44
days quicker than Goodyear. When comparing Goodyear & Cooper Tire, asset turnover Cooper
was able to use assets efficiently to generate sales. Both companies had exceptional collection
periods above industry standards.
When we looked over their debt ratio we were astonished to see how overly high both
companies debt ratios were above industry average. From an investing stand point it is clear that
Goodyear is a lot more risky to invest in. While Cooper, again over the industry stand point, was
less risky to invest in.
Profitability is a key concern to those who work for these companies. Goodyear and
Cooper were both way below industry averages for gross profit margin. This from a management
stand point is frowned upon. Cooper was well above industry standards for their operating profit
margin. This from a management position means they were on target with the production of the
items they were producing because taxes, interest, and preferred stock dividends are not
included. Return on common equity showed us that Cooper had a higher ratio compared to the
industry and Goodyear.

38
Finally, taking a look at Market ratios shows us how investors feel a firm is doing in term
of risk and return. Goodyear and Cooper earnings per share ratios were not what an investor
would like to see in terms of comparison to the industry standards. Both companies were below
the standards, and had a huge decrease in 2011.

39
RECOMMENDATIONS
We all know that most successful companies have a huge debt ratio number. It takes
money to make money. While we aren’t surprised to see that both Cooper and Goodyear are in
debt, we are very surprised at how far over the industry averages each company is. Looking at
these numbers from an investing stand point can help us define how risky each these companies
are.
Table 6: Debt RatioData
2009 2010 2011 2012 2013
13,675/14,410
=94.90%
14,986/15,630
=95.88%
Goodyear 16,880/17,629
=95.75%
16,603/16,973
=97.82%
16,603/17,527
=94.73%
1,769.5/2,100.3
=84.25%
1,844.7/2,305.5
=80.01%
Cooper 1,932.1/2,509.9
=76.98%
2,043.5/2,801.2
=72.95%
2,043.5/2,738.1
=74.63%
80% 70% Industry 70% 70% 70%
After looking at Table 6 you can see how substantially over the industry averages each
company is. Goodyear Tire & Rubber Company needs to focus on paying off some of their debt.
We can see that their debt numbers have not really changed much in the past five years, which to
us means they are also paying enormous amounts of interest. Cooper you can see has starting
paying off these debts, and should continue to do so.
When we analysis a company you want to see that they are keeping most of the sale
dollars that they sell. We want to know that the products we are selling are making us a profit.

40
When we look at Cooper Tire you can see that they are below the normal standard set by the
industry. Goodyear is also below, but for the most part is making better gross profit.
Table 7: Gross Profit Margin Ratio Data
2009 2010 2011 2012 2013
Goodyear (16,301-
13,676)/16,301
=16.1%
(18,832-
15,437)/18,832
=18.03%
(22,767-
18,771)/22,767
=17.55%
(20,992-
17,142)/20,992
=18.34%
(19,540-
15,399)/19,540
=21.19%
Cooper (2,779-
2,360)/2,779
=15.08%
(3,361-
2,940.3)/3,361
=12.52%
(3,907.8-
3,562.8)/3,907.8
=8.83%
(4,200.8-
3,546.6)/4,200.8
=15.57%
(3,439.2-
2,923)/3,439.2
=15.01%
Industry 23.7% 23.9% 23% 23.5% 25.8%
Both Cooper and Goodyear should look into what is causing these numbers to be so low.
They need to look into what is costing them so much money when it comes to the cost of goods
they sell. They should look into their raw materials, labor cost, shipping cost, and the price to sell
theses good and reduce these costs somehow to bring their gross profit margin up.
The most valuable thing a company can have is their assets. These assets need to be able
to generate sales to make the company profitable. This is very important to those who are
looking to invest in the company. Goodyear has what appears to be the worst return on total
assets number.

41
Table 10: Returnon Total Assets Data
2009 2010 2011 2012 2013
=-2.60%
-216/15,630
=-1.38%
321/17,629
=1.82%
183/16,973
=1.08%
600/17,527
=3.42%
Cooper 61.7/2,100.3
=2.94%
140.5/2,305.5
6.09%
253.5/2,509.9
=10.10%
220.3/2,801.2
=7.86
111/2,738.1
=4.05%
Industry -3.3% 0.9% 3.9% 4.8% 5.8%
Above, in table 10, we can see that Goodyear is well below the industry standards.
Goodyear needs to increase their sales in some way maybe by selling off old inventory,
discounting items, and do promotional campaigns. Sell some assets that are not working to
generate sales. They could even look into have equipment produce more efficiently.
The operating profit is a measure of how much money is left over after you pay all your
bills essentially. The lower our outgoing bills the better, right? If we less outgoing payments to
more money the company is retaining, and the more money is being left in the company to
invest, payout in dividends, or pay for capital expenditures. Both companies number show a bad
trend.

42
Table 8: OperatingProfit Margin Ratio Data
2009 2010 2011 2012 2013
Goodyear -26/16,301
= -.16%
399/18,332
=2.12%
943/22,767
=4.14%
781/20,992
=3.72%
1,274/19,540
=6.52%
Cooper 115.5/2,779
=4.16%
159.8/3,361
=4.75%
163.3/3,907.8
=4.18%
396.9/4,200.8
=9.45%
240.7/3,439.2
=7%
Industry -0.4% 4.5% 6.5% 7.2% 8.7%
Shown in table 8, we see that both companies are clearly paying too much in operating expenses.
Goodyear has consistently stayed below the average norm, and should look to reduces expenses where
ever they can. Which, they announced they would be doing throughout 2014. This recommendation also
goes for Cooper who dipped below the industry average after pulling themselves above it in 2012.

43
Works Cited
Cooper Tire and Rubber Co. (2014,July 14). Retrieved July 3, 2014, from coopertire.com/investors:
http://coopertire.com/Investors.aspx
Gitman, L., & Zutter, C. (2012). Principles of Managerial Finance. Boston:Pearson .
goodyear.com. (2014,July 15). Retrieved July 4, 2014, from investor.goodyear.com:
http://investor.goodyear.com/
Investopedia. (2014,July). Retrieved July 14, 2014 , from Investopedia.com:
http://www.investopedia.com/
Market Watch.(2014,July). Retrieved July 11, 2014, from marketwatch.com:
http://www.marketwatch.com/investing?link=MW_Nav_INV
MorningStar.(2014, July). Retrieved July 14, 2014, from mornginstar.com: http://www.morningstar.com/
sec.gov.(2014,July). Retrieved July 7, 2014, from U.S. Securities and Exchange Commision:
http://www.sec.gov/answers/form10k.htm
VentureLine.com/ratio-analysis-accounting ratios. (2014,July). Retrieved July 11, 2014, from
VentureLine.com: https://www.ventureline.com/ratio-analysis-accounting-
ratios/analysis/publicly_traded_company_vs_publicly_traded_company/GT/
Yahoo. (2014, July 17). Retrieved July 11, 2014, from Yahoo Finance: http://finance.yahoo.com/q?s=GT

44
APPENDIX
Financial Statements
This online report is prepared by VentureLine
Goodyear Tire & Rubber Company
SIC Code 3011
TIRES AND INNER TUBES
Income Statement
Qtr. End Yr. End Yr. End Yr. End Yr. End Yr. End
3/31/2013 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Sales 4853 19540 20992 22767 18832 16301
Cost of GoodsSold 3935 15399 17142 18771 15437 13676
GrossIncome 918 4141 3850 3996 3395 2625
Depreciationand
Amortization 177 722 687 715 652 636
Research/Development NA NA NA NA NA NA
InterestExpense 0 0 0 0 0 0
Unusual
Expenses/(Income) 11 96 204 174 266 228
Total Operating
Expenses 4598 18266 20211 21824 18433 16327
OperatingIncome 255 1274 781 943 399 -26
InterestIncome - non-
op. 85 431 379 361 342 325
Other
Expenses/(Income)
Pretax Income 50 813 440 618 8 -357
Income Taxes 19 138 203 201 172 7
Income After Taxes 31 675 237 417 -164 -364
Adjustmentsto Income -6 -75 -54 -96 -52 -11
NonrecurringItems 0 0 0 0 0 0
NetIncome 25 600 183 321 -216 -375
Cash Flow Statement
3/31/2013 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Total Cash from
Operations -937 938 1038 773 924 1297

45
Total Cash from
Investing -283 -1136 -1123 -902 -859 -663
Total Cash from
Financing 1462 1082 -426 994 179 -654
NetChange in Cash 105 715 -491 767 83 28
Capital Expenditures 271 1168 1127 1043 944 746
Exchange Rate Effects -137 -169 20 -98 -161 48
Cash Flow perShare 0.38 2.58 -1.99 2.83 0.34 0.12
Free Cash Flow -4.31 -0.87 -0.36 -1 -0.08 2.28
Balance Sheet- Assets
3/31/2013 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Cash 2386 2996 2281 2772 2005 1922
Short-Term
Investments 0 0 0 0 0 0
Accounts Receivable 3021 2435 2563 2849 2736 2540
Inventory 3168 2816 3250 3856 2977 2443
Other Current Assets
Total Current Assets 9042 8644 8498 9812 8045 7225
NetProperty, Plant,
Equip. 6901 7320 6956 6375 6165 5843
Long-Term Investments 0 0 41 41 36 30
Goodwill/Intangibles 786 806 804 811 844 870
Other Long-Term
Assets
Total Assets 17458 17527 16973 17629 15630 14410
Balance Sheet-
Liabilities
3/31/2013 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Accounts Payable 3218 3097 3223 3668 3107 2278
Short-Term Debt 274 87 198 412 426 338
Other Current Liab.
Total Current Liab. 5335 5025 5322 5929 5307 4095
Long-Term Debt 6307 6162 4888 4789 4319 4182
Other Long-TermLiab.
Total Liabilites 16922 16603 16603 16880 14986 13675
PreferredStock 500 500 500 500 0 0
Common Stock Equity 36 1106 -130 249 644 735
Total Liabilitiesand
Equity 17458 17527 16973 17629 15630 14410

46
Financial Statements
This online report is prepared by VentureLine
Cooper Tire & Rubber Co
SIC Code 3011
TIRES AND INNER TUBES
Income Statement
3/31/2013 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Sales 861.7 3439.2 4200.8 3907.8 3361 2779
Cost of GoodsSold 703.8 2923 3546.6 3562.8 2940.3 2360
GrossIncome 157.9 516.2 654.2 345 420.7 419
Depreciationand
Amortization 32.1 134.8 128.9 122.9 123.7 123.5
Research/Development NA NA NA NA NA NA
InterestExpense 0 0 0 0 36.6 47.2
Unusual
Expenses/(Income) 0 0 0 0 20.6 55.8
Total Operating
Expenses 765 3198.5 3803.9 3744.5 3201.2 2663.5
OperatingIncome 96.7 240.7 396.9 163.3 159.8 115.5
InterestIncome - non-
op. 7.1 31 37.2 39.7 0 0
Other
Expenses/(Income)
Pretax Income 90.5 213 368.5 134.1 159.8 115.5
Income Taxes 27.6 79.4 116 -135.5 20.1 0.2
Income After Taxes 62.8 133.6 252.4 269.6 139.8 115.3
Adjustmentsto Income -6.8 -22.6 -32.1 -16.1 -23.4 -21.9
NonrecurringItems 0 0 0 0 24.1 -31.7
NetIncome 56 111 220.3 253.5 140.5 61.7
Cash Flow Statement
3/31/2013 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Total Cash from
Operations -34 272.4 454.2 125.5 174.7 444.6

47
Total Cash from
Investing -49.3 -179.7 -205.1 -169.3 -117.2 -78.5
Total Cash from
Financing 9.3 -46.5 -132.6 -138.1 -71 -182.6
NetChange in Cash -79.6 45.9 118.1 -179.6 -13.6 179.3
Capital Expenditures 49.3 180.4 205.9 155.4 119.7 79.3
Exchange Rate Effects -5.6 -0.2 1.6 2.2 -0.1 -4.2
Cash Flow perShare -1.24 0.71 1.87 -2.85 -0.22 2.95
Free Cash Flow -1.4 1.02 3.51 -0.89 0.47 5.61
Balance Sheet- Assets
3/31/2013 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Cash 272.2 397.7 351.8 233.7 413.4 427
Short-Term
Investments 0 0 0 0 0 0
Accounts Receivable 519.2 477 468.4 509.3 483.7 367
Inventory 658.9 517.2 561.9 465.4 386.8 298.4
Other Current Assets
Total Current Assets 1525.4 1454.8 1449.7 1264 1340.2 1131.8
NetProperty, Plant,
Equip. 941.3 974.3 929.3 899 852.4 851
Long-Term Investments 0 0 0 0 24.4 20.8
Goodwill/Intangibles 175.1 179.2 168.9 117.3 28.2 29.6
Other Long-Term
Assets
Total Assets 2884.3 2738.1 2801.2 2509.9 2305.5 2100.3
Balance Sheet-
Liabilities
3/31/2013 12/31/2013 12/31/2012 12/31/2011 12/31/2010 12/31/2009
Accounts Payable 353.5 302.4 379.9 339.2 384.5 300.4
Short-Term Debt 51 40 35.2 152.9 152.8 172.2
Other Current Liab.
Total Current Liab. 683.3 564.6 655.1 651 694.3 636.3
Long-Term Debt 334.8 321 336.1 329.5 320.7 331
Other Long-TermLiab.
Total Liabilites 2068.4 2043.5 2043.5 1932.1 1844.7 1769.5
PreferredStock 0 0 0 0 0 0
Common Stock Equity 815.9 990.9 757.6 577.8 460.8 330.8
Total Liabilitiesand
Equity 2884.3 2738.1 2801.2 2509.9 2305.5 2100.3

Comparing Goodyear and Cooper Tire's Financial Performance

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