Write a five- to seven-page financial statement analysis of a public company, formatted according to APA style as outlined in the Ashford Writing Center. In this analysis, you will discuss the financial health of this company with the ultimate goal of making a recommendation to other investors. Your paper should consist of the following sections: introduction, company overview, horizontal analysis, ratio analysis, final recommendation, and conclusions. Your paper needs to include a minimum of two scholarly resources in addition to the textbook as references.
Here is a breakdown of the sections within the body of the assignment:
Company Overview
Provide a brief overview of your company (one to two paragraphs at most). What industry is it in? What are its main products or services? Who are its competitors?
Horizontal Analysis of Income Statement and Balance Sheet
Prepare a three-year, horizontal analysis of the income statement and balance sheet of your selected company. Discuss the importance and meaning of horizontal analysis. Discuss both the positive and negative trends presented in your company.
Ratio Analysis
Calculate the current ratio, quick ratio, cash to current liabilities ratio, over a two-year period. Discuss and interpret the ratios that you calculated. Discuss potential liquidity issues based on your calculations of the current and quick ratios. Are there any factors that could be erroneously influencing the results of the ratios? Discuss liquidity issues of competitive companies within the same industry.
Recommendation
Based on your analysis, would you recommend an individual invest in this company? What strengths do you see? What risks do you see? It is perfectly acceptable to state that you would recommend avoiding this company, as long as you provide support for your position.
The paper
Must be five to seven double-spaced pages in length (not including title and references pages) and formatted according to APA style as outlined in the Ashford Writing Center.
Must include a separate title page with the following:
Title of paper
Student’s name
Course name and number
Instructor’s name
Date submitted
Must use at least two scholarly sources in addition to the course text.
Must document all sources in APA style as outlined in the Ashford Writing Center.
Must include a separate references page that is formatted according to APA style as outlined in the Ashford Writing Center.
Carefully review the Grading Rubric for the criteria that will be used to evaluate your assignment.
Required Resources
Text
K Wainwright, S. (Ed.). (2012). Principles of Accounting: Volume I . San Diego, CA: Bridgepoint Education, Inc.
Chapter 9: Ratio Analysis
Multimedia
ALaccounting. (2011, April 26). Ratios to know – debt to asset [Video file]. Retrieved from https://www.youtube.com/watch?v=QjoS8YS2dtQ
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Education Unlocked. (2014, February 14). Current ratio [Video file]. Retrieved from https://www.youtube.com/watch?v=sWWnsvuQ3kk
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Education Unlocked. (2013, July 15). How to calculate inventory turnover [Video file]. Retrieved from https://www.youtube.com/watch?v=Ophz0_bkUAg
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Education Unlocked. (2014, February 14). Quick ratio (acid test ratio)[Video file]. Retrieved from https://www.youtube.com/watch?v=J_NM9TVwgfU
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Mursau, A. (2013, March 26). Stockholders equity (rate of return on common stock equity, trading on equity, ROE, ROA) [Video file]. Retrieved from https://www.youtube.com/watch?v=LuQOoQTZ8gM
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Routh, B. (2011, May 24). Financial statement analysis: Vertical analysis – Financial accounting video [Video file]. Retrieved from https://www.youtube.com/watch?v=OT1BVZPNfks
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Routh, B. (2011, May 22). What is financial statement analysis: Horizontal analysis? – Accounting video [Video file]. Retrieved from https://www.youtube.com/watch?v=x_ltrzpz4Ew
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Westlake, J. (2012, September 21). Net profit margin presentation [Video file]. Retrieved from https://www.youtube.com/watch?v=O-WuC_Nn4Sg
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Recommended Resources
Websites
Boundless (2015). Current ratio. Retrieved from https://www.boundless.com/finance/textbooks/boundless-finance-textbook/analyzing-financial-statements-3/liquidity-ratios-41/current-ratio-214-6599/?
Flashcard Machine – Create, Study and Share Online Flash Cards. (http://www.flashcardmachine.com/2101951/6z7s)
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