A company’s growth is dependent on its financial information. It is important to record and maintain accurate information to produce concise financial statements.
Both internal and external users have different interests and utilizes the information communicated on financial statements to make analytical, logical, conscious and profitable investment decisions to make better economic decisions.
Chapter 17 reviews a variety of methods used to analyze financial statements.
Review Chapter 17 and write a THREE – FIVE page summary of the chapter. All sections of the chapter MUST be covered. Ensure to state the contribution of each group members.
Research a publicly traded company and its competitor (For example: Apple and Samsung) and obtain copies of the COMPARATIVE BALANCE SHEET AND INCOME STATEMENT
Utilize the information learned in Chapter 17, apply methods to analyze the financial statements. N.B. ATTACHED is a pre-designed MICROSOFT EXCEL spreadsheet for you to use in computing the financial statement analysis for the publicly traded companies. Each analysis tool must be covered (horizontal, vertical, common-sized statements, and Ratio Analysis. You can use (nasdaq.com, yahoo finance, marketwatch) to research financial statements.
For the vertical and horizontal analysis, in Excel, you will type the accounts and dollar values for the most recent years 2020 – 2019 or 2019 – 2018 (as listed on the financial statements even if there is no dollar value for an account) for ONE of the companies; then perform the analysis.
For the common-sized statements, you will calculate the percentages for the most recent year (for e.g. 2020 or 2019) for the TWO companies using the income statement and use this information for the competitors analysis.
For the Ratio analysis you need to compute 3 ratios from each section: (for example: Liquidity you can test the working capital, current ratio and quick ratio for both the current year and the previous year. Therefore 6 (ratio tests per category) *3 (three categories – liquidity, solvency and profitability) = 18
In Microsoft Word, you will conduct a competitor’s analysis of how your company is performing in relation to the competition 2 pages using the common-size income statements as your basis of discussion. Additionally, use online articles, journals and news releases to support your analysis based on current and future developments or engagements that will enhance either company’s business operation.
Additionally, in Microsoft Word you will discuss the overall financial health of the company using the financial analysis (vertical, horizontal, common-size statements and ratio) to support your arguments. Describe the company’s financial stability in the U.S. Market and internationally? What should the company do to improve or keep doing more of to dominate/continue to dominate the market 2 pages
You will submit TWO documents: the Microsoft Word and Excel Spreadsheet. The Final Submission must meet the following specifications:
Microsoft Word (Times New Roman, 12 point font, Double space, and 1″ margin)
Cover page: Title, name students, college, date of submission
Abstract: 250 words brief overview of what you did in the assignment
Chapter 17 Summary (3 – 5 pages)
Competitor’s Analysis (2 pages)
Financial Health of the company (2 pages)
Conclusion (1/2 page)
Horizontal Analysis financial statement
Vertical Analysis financial statement
Common-size income statement
eText: Accounting, 27th Edition 2018 ISBN: 978-1-337-27209-4
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