ACCOUNTING REPORT
steve912
3.pptxFinancial Statement Analysis Project
Income Statement, Balance Sheet, and Cash Flows
Analysis of Income Statement, Balance Sheet, and Cash Flows
Next step of the project is to analyze the company’s financial performance and financial position
You have identified the company’s moat and management. Now you want to assess how strong the moat is and how well the management runs the company
You are also going to calculate some financial ratios using income statement and balance sheet data to help you learn about the company’s financial strength
2
Indicators of Moat and Management
If you have not calculated the indicators below, tabulate and discuss the following financial figures in the past 10 years:
For Moat:
(Book value + Dividend) per share annual growth rate
Earnings per share annual growth rate
Cash flow from operation per share annual growth rate
Sales per share annual growth rate
For Management:
ROE
ROA (ROIC)
LT Debt to Earnings ratio
Think about this: What earnings figure should you use in the calculations above? Net Income or Income from Continued Operations?
Other Income Statement and Cash Flow Indicators
In your next report, also tabulate and discuss the following ratios for the last 10 years:
Gross Profit/Net sales
Operating Income/Net sales
Income from Continued Operations/Net sales
Free cash flow (=cash flows from operating activity – CapEx)
Free cash flow ratio (=Free cash flow/Income from continued operations)
Also, find out and report the company’s current P/E ratio
Balance Sheet Indicators
In addition, tabulate and discuss the following ratios for the last 10 years in evaluating the company’s financial position:
Liquidity:
Current ratio (=Current assets/Current Liabilities, preferably >2)
Quick ratio (=Cash and Cash Equivalents + A/R + ST Investment / Current Liabilities, preferably > 1)
Solvency:
LT Debt / Total Assets
Submission of Your Work
Submit to Canvas a typed write-up (no more than two pages) of the company’s financial performance and financial position by March 1st for comment
While you will not lose credit for not submitting the write-up, I will not give feedback if it is late.
