This Portfolio Project has two parts: Calculations due this week in Module 7 and a 4- to 6-page essay due next week in module 8. While the calculation requirements of this assignment are important, equally important are your discussion and analysis of the quantitative results. You will submit two documents: 1) a spreadsheet containing your horizontal and vertical analysis (and perhaps your ratios) in Module 7 and 2) a word document containing your essay.

For this assignment you will select to work on EITHER Polaris or Arctic Cat. Depending on which you choose, access the firms financial statements for fiscal years ending after December 31, 2014, from the firms website (Polaris.com & Arcticcat.com) or the SEC database (www.sec.gov).Use the most current 10K statements available onSECor annual statements inYahoo Finance.Complete the following for your chosen firm (Polaris or Artic Cat) in an Excel spreadsheet:

1. Horizontal and vertical analysis of the income statements for the past two years (all yearly balances set as a percentage of total revenues for that year) for both firms.
2. Horizontal and vertical analysis of the balance sheets for the past two years (all yearly balances set as a percentage of total assets for that year) for both firms.
3. Ratio analysis (eight ratios of your choosing) for the past two years PLUS a measurement for the creditworthiness of both firms as measured by Altmans Z-score.

Much of this course has concentrated on learning the financial statements, primarily because there was not an accounting prerequisite. Because of this concentration, you may find this assignment challenging. However, if you understand the financial statements, then the horizontal and vertical analysis should be rather intuitive. For example, if you see sales rise by 20%, then shouldnt you also see net income rise by 20% or more if the managers are effective at controlling costs? If you see sales rise by 20% and assets rise by 40%, you have to ask why this is happening. It would appear that assets have risen too far given the sales that are generated from those assetswhy did this occur?You may have to research that type of question and discuss it in your analysis.

Review both videos:Performing Vertical Analysisusing ExcelandPerforming Horizontal Analysis using Excel,which demonstrates the completion of vertical and horizontal analysis using Excel. If you would like some additional guidance on the spreadsheet requirement of the portfolio project, please watch the video. Note that the video does not discuss adding the 8 required ratios to your spreadsheet; however, you are required to submit your company ratios on this spreadsheet as well as the vertical/horizontal analysis. As always, your instructor is available for follow-up questions.

Youve had some experience with financial ratios through the Discussion Board. Your instructor suggests that you start your ratio analysis with the four ratios found in the DuPont equation. If you discover a weakness in one component of the DuPont ratios, then it would make sense to look at ratios that are closely related to the troublesome ratio. For example, if you discover that the asset turnover is declining over time, then take a look at some related ratios such as the inventory turnover rate or the average collection period. If you discover that the equity multiplier is increasing (indicating greater reliance on debt), then look at some related ratios such as the debt ratio or times interest earned. These ratios are discussed in our textbook, even though you may not have been assigned to thoroughly read the chapters.

Finally, please read through the Portfolio Project Part One Grading Rubric, located in the Module 7 folder, that will be used to grade your assignmentyou will get a feeling for expectations by doing so. Your instructor is here to help you through this project. If you have questions, please let your instructor know. He or she may be willing to take a quick look at your horizontal and vertical analysis to give you feedback in advance since you will not have had much experience on that calculation prior to the project. Always communicate right away with your instructor when you need assistance!