Financial accounting Statement Analysis Project

Financial Statement Analysis Project Guidelines

The purpose of this project is to provide students with the opportunity to use their knowledge of financial statements and EXCEL to prepare a basic financial analysis. The project has three parts:

1. Common-size Analysis using Excel

2. Ratio Analysis

3. Business memo reporting results

Students will be select a company that they are interested in. After you have been selected your company go to www.yahoofinance.com and print out the company Balance Sheet (Statement of Financial Position) and Income Statement.

PART ONE: Excel Worksheets

1. Print out the financial statements for your company from yahoo finance.

2. Read the material in the text relating to common size analysis.

3. Open a work sheet in Excel.

4. Students will create one work sheet for each financial statement.

5. Type in all of the information from the balance sheet into the first worksheet.

6. There will be 4 columns; 2 columns for the 2 most recent years of financial data found on the financial statement and 2 for the percentages that will be calculated.

7. Once all the data from the statement has been entered, enter the formula to percentage each account off of the total asset figure. Each account in the asset section will be shown as a percentage of Total Assets (ie Total Assets will equal 100%). You will do the same thing for Liabilities and Equity.

8. This will be done for each year of data.

9. When the Balance Sheet is completed, there will be 4 columns of information. 2 will contain dollar figures directly from the financial statement and 2 will show the percentage of each account balance of either total assets, liabilities or equity.

10. The cells must contain the formulas!!

11. Type in all the data from the Income Statement.

12. Create 4 columns; 2 for the dollar data from the financial statement and 2 for percentages.

13. Once all the data has been entered, enter the formula to percentage each account off of the Total Revenue figure.

14. The Income Statement worksheet will have 4 columns; 2 showing dollar figures from the financial statement and 2 showing the percentage of each account balance of Total Revenue.

15. Print the Worksheets showing the dollar values and percentages.

16. Print the Worksheets showing the formulas in each cell.

PART 2: Ratio Analysis

Calculate the following ratios for 2 Years:

Current Ratio

Quick Ratio

Working Capital

Inventory Turnover

Accounts Receivable Turnover

Days sales in Receivables

Debt Ratio

Return on Investment

PART 3: Business Memo

Review the information that has been prepared. Identify key areas of change on the financial statements and the ratios.

Prepare a Formal Business Memo to report your findings as it pertains to the company you analyzed. Directly refer to the data in the worksheets and ratios. The memo should be addressed to me. You will be making a recommendation as to whether or not our company should invest in this company.

The memo should be concise, well worded and professional in tone. It should not exceed one and a half pages.

This Project is Due on: November 26th 2013

Submit the following:

4 Excel Worksheets

Ratios

Business Memo

Company Financial Statements