Construct Appendix B:
Using the formatted income statement and balance sheet in Excel from Week 1 – Assignment 1, and following the instructions in the BUS401| Creating Common Size Financial Statements in Excel (Links to an external site.) video,
- Calculate and format the common size income statement for the three years.
- Calculate and format the common size balance sheet for three years.
- Save this Excel file as a PDF and title it “Appendix B”.
- Submit the PDF version of Appendix B to Waypoint.
The Common Size Financial Statements: Appendix B PDF file must contain the formatted common size income statement and balance sheet.
For this assignment, address the following seven parts in a Word document:
Part 1: Overview of the company (one paragraph)
- State the name of the company.
- Provide a brief overview of the company you selected, including a description of its business operations.
- State the current market price per share.
Part 2: Income statements (one to two paragraphs)
- Summarize key trends in revenues, operating income, and net income over the last 3 years.
Part 3: Common size income statements (one paragraph)
- Evaluate the trends in gross margin, operating income margin, and net profit margin over the past 3 years.
Part 4: Balance sheets (one to two paragraphs)
- Summarize key trends in total assets, total current assets, total current liabilities, long-term debt, and total shareholders’ equity over the past 3 years.
Part 5: Common size balance sheets (one paragraph)
- Evaluate the trends in total current assets as a percent (%) of total assets, total current liabilities as a percent (%) of total assets, long-term debt as percent (%) of total assets, and total shareholders’ equity as a percent (%) of total assets over the past 3 years.
Part 6: Cash flow (one paragraph)
- Calculate simple cash flow for the past 3 years.
- Summarize the trend in simple cash flow for the past 3 years.
- Compare the simple cash flow to the net operating cash flow from the statement of cash flows for the past 3 years.
Part 7: Financial analysis conclusion: (one paragraph)
- Determine the strengths and weaknesses of the company based primarily on the trends in items discussed from the income statements, balance sheets, common size income statements, and common size balance sheets, as well as the comments on cash flow.
- Create a table that indicates whether each financial fact is a strength or a weakness.
- Determine the overall financial strength of the company based on the financial facts included as strengths or weaknesses.
- Categorize the overall financial performance of the company as strong, neutral, or weak.
- Justify your conclusion based on the table you created.