income statement items using excel B u s i n e s s F i n a n c e

Overview:

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:

1. 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:

   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.

2. 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.
3. 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.
   1. To write your Financial Statement Analysis, you will begin by introducing your company with a brief history of the company.
   2. 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?
   3. Be sure to include your Excel analyses in your submission.
   4. 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.
4. 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