Assignment: PRINCIPLES OF BUSINESS FINANCE LAB
Goals for this assignment:
- Gather financial statements
- Calculate financial ratios
Collect financial statements.
Financial statements are available on the internet through at the yahoo finance website. At this website you will put the ticker symbol for your company in the symbol box and press "go". At this point you will see a page that has financial information about your company. On the left-hand side of the screen there will be a series of options that you can choose to get more information about your company. Under the heading "financial statements" you will see an option for "income statement" and "balance sheet." You want annual statements. The financial statements for the past 3 years should be available. (Depending on the fiscal year for your company, these might be until 2016 or 2017.)
Calculate the DuPont decomposition.
Calculate the DuPont Decomposition for each of the three years for your company. The DuPont Decomposition is composed of
ROE = NI/Equity = NI/Sales *Sales/Assets * Assets/Equity
Therefore, you should have a total of twelve calculations (four ratios for each of the three years).
Determine liquidity.
Determine the company's liquidity by calculating the current ratio, the quick ratio, and the cash ratio for each of the three years. This should be a total of nine calculations.
Present these ratios in the following format
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NI/Equity
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NI/Sales
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Sales/Assets
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Assets/Equity
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Current Ratio
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Quick Ratio
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Cash Ratio
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2015
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2016
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2017
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Make observations.
Write a paragraph in which you describe what you observe about the financial ratios for your company. These observations will vary greatly depending upon the company you are analyzing. Some things you may want to consider are:
• Has the company drastically increased or decreased its use of debt?
• Has the company's liquidity position changed over the three years?
• Has ROE been rising or falling? If so, what has contributed to this change?
• What trends do you see developing in the data?
• Do you see any major changes in the financial status of the company over the time period?
Looking Forward
This will be part of your company analysis that you will complete later this semester. Be sure to keep your electronic files so that you do not have to recreate the work that you have done.