ASSIGNMENT:
Locate the Income Statement and the Balance Sheet from the TWO most recently completed year-ends of the company that you have been assigned (12/31/15 and 12/31/14). Sources of this information include: finance.yahoo.com, marketwatch.com, and/or using a search engine (i.e.- google) to locate your company's 2015 Balance Sheet and 2015 Income Statement. For whatever source you use for the balance sheet and income statement, make sure that the numbers you include balance and add/subtract. Test the math in the source you use - you are responsible if amounts are missing and/or do not add up. If they do not add up, check another source to get the correct or missing numbers.
Using these financial statements, answer the following questions about your company:
1) Find and list each of the following amounts for your company for the TWO most recent fiscal years. You must list only these amounts separately in section #1 of your paper (it is not acceptable to highlight these amounts on the full balance sheet or income statement):
a. Cash (including any cash equivalents)
b. Total Assets
c. Total Revenue (may be labeled Net Sales, Sales, Net Revenue, etc.)
d. Net income (or loss)
e. Complete the 'Fundamental Accounting Equation (Assets = Liabilities + Equity) with the amounts for your company for both years. Note: you may need to calculate the Liabilities total since many companies only provide subtotals for Total Assets and Total Stockholders Equity.
2) Ratio analysis: Using the formulas found in Chapter 12, calculate the following 5 ratios for your company using the most recent year-end balance sheet & income statement (12/31/15). Calculate the following ratios for the most recent ONE year only:
a. Current ratio
b. Debt to equity ratio
c. Gross Profit Ratio
d. Profit margin
e. Price-earnings ratio. For this ratio, use the current stock price (the stock price on the date you complete this section).
3) Horizontal analysis: Using the format found in Chapter 12, prepare a horizontal analysis comparing the TWO most recent years of income statements (12/31/15 and 12/31/14). Make sure you show/include all of the individual revenues and expenses included in your company's income statement (do NOT combine any rows). If you use a source other than www.finance.yahoo.com for your amounts, include a copy of the income statements you used.
4) Vertical analysis: Using the format found in Chapter 12, prepare a vertical analysis comparing the TWO most recent years of balance sheets (12/31/15 and 12/31/14). Make sure you show/include all of the individual assets, liabilities, and equity accounts included in your company's balance sheet (do NOT combine any rows). If you use a source other than www.finance.yahoo.com for your amounts, include a copy of the balance sheet you used.
5) Further analysis of the ratio analysis, horizontal analysis, and vertical analysis: Using the work performed in sections 2, 3, and 4, perform the following:
a. Ratio analysis - Choose ONE of the 5 ratios calculated in section #2 and provide insightful & detailed commentary as to why the ratio is good (a positive amount for this company and industry) OR why the ratio is a cause of concern.
b. Horizontal analysis - Identify and discuss ONE of the 2015 horizontal percentages that you calculated in section #3 that you believe is either good for this company/industry or is a cause of concern. The horizontal % you discuss should be a significant one (one that shows a significant increase or decrease from 2014 from the perspective of a manager, lender, or investor), and should not be a subtotal or total. Explain your answer in detail (at least 4-5 sentences).
c. Vertical analysis - Identify and discuss ONE of the 2015 vertical percentages that you calculated in section #4 that you believe is either good for this company/industry or a cause of concern. The vertical % you discuss should be a significant one (i.e.-from the perspective of a manager, lender, or investor), and should not be a subtotal/total. Explain your answer with at least 4-5 sentences).