In Modules 1 and 2, we are focusing on the analysis of company financial statements to analyze company performance. In Part One of the Financial Statement Analysis assignment, you will obtain a company's financial statements, and you will perform horizontal (trend) and vertical (common-size) analysis. We will complete Part Two of this analysis in Module 2.

Instructions:

Select a company, and download financial statements - Follow the step-by-step instructions in this document to select a company and download their financial statements from the Mergent Online database (The Mergent Database is accessible in the Module 1 Learning Resources folder): Financial Statement Analysis - How to Download Financial Statements.docx Financial Statement Analysis - How to Download Financial Statements.docx - Alternative Formats Optional: Click here to view a video showing how to download financial statements from the Mergent Online database.

Review Horizontal and Vertical Analysis for Balance Sheet and Income Statement - If you do not know how to create a vertical and horizontal analysis for the Balance Sheet and Income Statement, please view the following videos for instructions: "Horizontal Analysis for Balance Sheet Items Using Excel" (YouTube video) "Vertical Analysis for Balance Sheet Items Using Excel" (YouTube Video) "Horizontal Analysis for Income Statement Items Using Excel" (YouTube video) "Vertical Analysis for Income Statement Using Excel (YouTube video) Remember that:

Vertical analysis is used to detect items that are out of line, that deviate from a predetermined amount, or that are indicative of other problems.

Horizontal analysis is used to evaluate trends in the financial condition of an organization.

Perform the Horizontal and Vertical Analysis of the Balance Sheet and Income Statement, and Prepare a Written Analysis Your written analysis will include the major changes that are evident over the 5-year period for both the balance sheet and income statement accounts.

To write your Financial Statement Analysis, you will begin by introducing your company with a brief history of the company.

You will then provide the information from your horizontal analysis and vertical analyses. What trends did you discover? Is the company improving overtime or declining?

Be sure to include your Excel analyses in your submission.

There is no length criteria; however, your analysis should include detailed information to provide the reader with insight into the financial condition of the company.

Submit your analyses. Submit the following files:

Written analysis

Horizontal Analysis for both your Balance Sheet and Income Statement

Vertical Analysis for both your Balance Sheet and Income Statement

PART 2

we are focusing on the analysis of company financial statements to analyze company performance. In Part One of the Financial Statement Analysis assignment, you obtained a company's financial statements, and performed horizontal (trend) and vertical (common-size) analysis.

Part Two of the financial statement analysis looks at the company in terms of financial ratios. You will look at four categories of ratios: liquidity, efficiency, solvency, and profitability. (Note: some of these category titles may be titled slightly different in the various readings).

Instructions:

Look at the ratio Excel sheet you downloaded from the Mergent database.

Select at least two ratios from each category. These are the ratios you will use for your ratio template assignment.

Now that you have an understanding of these ratios, analyze the performance of your company based on these ratios over the past five years.

Next, you want to compare your companys performance to its industry. Click the file link below to review instructions to obtain industry data from the Mergent Database: How to Obtain Industry Data.docx How to Obtain Industry Data.docx - Alternative Formats

To write part two of your analysis, you will perform a trend analysis - How did your company perform overtime in terms of each ratio?

In addition, you will analyze how your company performed in relation to its industry. Your company might show that it is continually improving in one area, but it is lagging behind when compared to its industry.

The final piece of your analysis is the conclusion in which you will make recommendations on the following:

Would you consider this company a good company to investment in and WHY!

Would you consider this company a good company to lend money to and WHY?

In other words, if you were an investor, would you invest your money in this company? Also, if you were a creditor, would you lend money to this company?

In detailing your response, be sure you are pulling data from your analysis, both financial statement and ratio, to support both of your conclusions.