Case FA-3801 Excel: Financial Statement Analysis for Jubilee Company

The CEO of Jubilee Company wants a brief analysis of Jubilees ability to pay its current liabilities, its ability to pay its debts, and its profitability over the past three years. Selected financial statements for Jubilee Company for the years of 2021 through 2023 will be provided to you.

Requirements

1. Calculate the following measures and ratios for each of the three years, putting the formulas in the appropriate cells (Cells B4 through D6) in the RATIOS worksheet. What does this first group of ratios measure?

   1. Working capital 2. Current ratio 3. Quick ratio

2. Calculate the following ratios for each of the three years, putting the formulas in the appropriate cells (Cells B7 through D8) in the RATIOS worksheet. What does this second group of ratios measure?

   1. Debt ratio

   2. Times-interest-earned ratio

3. Calculate the following ratios for each of the three years, putting the formulas in the

   appropriate cells (Cells B9 through D10) in the RATIOS worksheet. What does this third group of ratios measure?

   1. Gross margin percentage

   2. Return on sales

4. Format the ratios in the RATIOS worksheet with the following formats:

   1. Working capital: Number, 0 decimal places, Use 1000 Separator

   2. Current, quick, debt, and times-interest-earned ratios: Number, 2 decimal places

   3. Gross margin percentage and Return on sales: Percentage, 2 decimal places

5. Create sparklines in the cells immediately to the right of the earliest year of ratios you calculated (Cells E4 through E10) in the RATIOS worksheet).

6. Save your workbook using your last name combined with the word ratios as the file name.

7. What is your overall assessment of Jubilees ability to pay its current liabilities, its ability to pay its debts, and its profitability over the past three years?

Check figures

Click on the RATIOS worksheet. If you have created the ratio formulas correctly, you should see the following answers:

• Working capital in Cell C4 should be $32,960

• Current ratio in Cell D5 should be 2.62

• Quick ratio in Cell B6 should be 1.09

• Debt ratio in Cell C7 should be 42.4%

• Times-interest-earned ratio in Cell D8 should be 8.4

• Gross margin percentage in Cell B9 should be 22.74%

• Return on sales in Cell C10 should be 10.91%

  Your completed Excel worksheet should look similar to the Excel screenshot below. Yours will have numbers visible, but it should have content in the same cells and be formatted similarly. Your sparklines will be different.

Be sure to carefully check your work.

Jubilee Company Income statements For years ending 12/31/22 12/31/21 12/31/23 $ $ Sales Cost of goods sold Gross margin General and administrative expenses Operating income Interest expense Income before taxes Tax expense Net income $ 155,700 $ 120,300 35,400 $ 17,200 18,200 $ 1,350 16,850 $ 3,370 13,480 $ 165,300 $ 118,900 46,400 $ 18,500 27,900 $ 2,350 25,550 $ 5,110 20,440 $ 175,400 125,800 49,600 19,300 30,300 3,610 26,690 5,330 21,360 $ Jubilee Company Statement of retained earnings For years ending 12/31/21 12/31/22 Beginning retained earnings 30,220 41,300 Net income 13,480 20,440 Less dividends (2,400) (2,400) Ending retained earnings 41,300 59,340 12/31/23 59,340 21,360 (2,400) 78,300 Jubilee Company Balance sheets As of December 31, 2021, 2022, and 2023 12/31/21 12/31/22 12/31/23 $ Assets Cash Accounts receivable Inventory Total current assets Property, plant & equip Intangible assets Other long-term assets Total long-term assets Total assets 9,500 $ 7,300 18,500 35,300 31,500 5,600 3,800 40,900 76,200 $ 14,900 $ 9,700 32,960 57,560 42,680 5,100 8,100 55,880 113,440 $ 11,400 11,800 48,240 71,440 56,700 7,460 12,100 76,260 147,700 $ $ 15,400 $ 13,500 28,900 Liabilities and Equity Liabilities Accounts payable Long-term loans payable Total liabilities Equity Common stock Retained earnings Total equity Total liabilities and equity 24,600 $ 23,500 48,100 27,300 36,100 63,400 6,000 41,300 47,300 76,200 $ 6,000 59,340 65,340 113,440 $ 6,000 78,300 84,300 147,700 $ Jubilee Company Ratios 12/31/21 12/31/22 12/31/23 Working capital Current ratio Quick ratio Debt ratio Times-interest-earned ratio Gross margin percentage Return on sales 1 2. 3 4 Working capital 5 Current ratio 5 Quick ratio 7 Debt ratio B Times-interest-earned ratio 9 Gross margin percentage 0 Return on sales 1 Jubilee Company Ratios 12/31/21 19,900 2.29 1.09 0.38 13.48 22.74% 7.12% 12/31/22 32,960 2.34 1.00 0.42 12/31/23 44,140 2.62 0.85 0.43 8.39 28.28% 10.81% \// 11.87 28.07% 10.91% 2. 3 4