Competency

Appraise the financial health and performance of a company.

Scenario

The Corporate Director of Acquisitions has approached you to assist with preparing financial data to help identify a potential new acquisition for your company. They have narrowed down the target to two companies and need your help in selecting the best one. You agree to help and think that the best approach would be to take the two companies and prepare avertical and horizontal analysisof both the income statement and balance sheets for two years of data.

Instructions

You discuss your plan with the director, and you both decide that you should create anExcel filecontaining four tabs, labeling the four tabs as follows:

• Tab1: "Income statement vertical analysis"
• Tab 2: "Income statement horizontal"
• Tab 3: "Balance sheet vertical analysis"
• Tab 4: "Balance sheet horizontal analysis"

In addition, you both decide it best to also create aWord documentwith your assessment of each company's performance and support which company is the better acquisition target.