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Horizontal and vertical analysis of the Income Statements for the past three years (all yearly balances set as a percentage of total revenues for that year).




This Portfolio Project has two parts: calculations and a 4- to 6-page essay.;While the calculation requirements of this assignment are important, equally;important are your discussion and analysis of the quantitative results. You;will submit two documents: 1) a spreadsheet containing your horizontal and;vertical analysis (and perhaps your ratios) and 2) a word document;containing your essay.;Choose a publicly traded company and perform an expanded analysis on the;financial statements. Please use the most current 10K statements available;on or annual statements in; You will submit both parts;separately.;Part 1: Please complete the following for your chosen firm in an Excel;spreadsheet;Horizontal and vertical analysis of the Income Statements for the past three;years (all yearly balances set as a percentage of total revenues for that year).;Horizontal and vertical analysis of the Balance Sheets for the past three years;(all yearly balances set as a percentage of total assets for that year).;Ratio analysis (eight ratios of your choosing) for the past three years PLUS a;measurement for the creditworthiness of your firm as measured by Altman?s;Z-score. Note that if you used your chosen firm for our ratio-related;discussion posts, then you MUST also present industry-average ratios or;current year competitor ratios for your ratio analysis. Comparing your firm?s;ratios to a close competitor or an industry-average ratio makes your analysis;much more meaningful.;Part 2: The Paper;4-6 pages in length.;Include a proper introduction and conclusion.;Include a reference page.;Your paper should provide your reader with an overall understanding of the;financial health of your chosen firm including the following;Discussion of the ratio analysis results, including rationale for the ratios;chosen.;Discussion of all horizontal and vertical analysis from above.;Discussion of four items from the management discussion of the firm that;support the conclusion formed in your discussion of the financial results.;Much of this course has concentrated on learning the financial statements;primarily because there was not an accounting prerequisite. Because of this;concentration, you may find this assignment challenging. However, if you;understand the financial statements, then the horizontal and vertical analysis;should (hopefully) be rather intuitive. For example, if you see sales rise by;20%, then shouldn?t you also see net income rise by 20% or more if the;managers are effective at controlling costs? If you see sales rise by 20% and;assets rise by 40%, we have to ask why this is happening. It would appear;that assets have risen too far given the sales that are generated from those;assets?why did this occur? You may have to research that type of question;and discuss it in your analysis.;The link below demonstrates the completion of vertical and horizontal;analysis on Nike using Excel. Dr. Jill Bale, the course writer, demonstrates;the use of Excel equations and discusses some of the issues you may face;when working on the spreadsheet for your portfolio project. If you would like;some additional guidance on the spreadsheet requirement of the portfolio;project, please watch the video. Note that the video does not discuss adding;the 8 required ratios to your spreadsheet, however, you are required to;submit your company ratios on this spreadsheet as well as the;vertical/horizontal analysis. As always, your instructor is available for;follow-up questions.;Bale, J. (2013, August 19). Demonstration of Vertical/Horizontal Analysis;using Excel [Video file].;Retrieved from;Vertical_analysis_-_MP4_with_Smart_Player_(Large)_-_20130819_10.10.04AM.html;You?ve had some experience with financial ratios through Discussion Board.;I?d suggest that you start your ratio analysis with the four ratios found in the;DuPont equation. If you discover a weakness in one component of the;DuPont ratios, then it would make sense to look at ratios that are closely;related to the troublesome ratio. For example, if you discover that the asset;turnover is declining over time, then take a look at some related ratios such;as the inventory turnover rate or the average collection period. If you;discover that the equity multiplier is increasing (indicating greater reliance;on debt), then look at some related ratios such as the debt ratio or Times;Interest Earned. These ratios are discussed in our textbook, even though;you may not have been assigned to thoroughly read the chapters.;Finally, please read through the rubric that will be used to grade your;assignment?


Paper#76543 | Written in 18-Jul-2015

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