这个作业是分析公司的财务报表并得出结论
FIN311 Spring 2020
You will be submitting a 3-4 page written paper, along with a spreadsheet with:
1. The following financial statements for the firm you selected (each in its own sheet)
a. 2019 Balance Sheet (this will include the data from the 2017 Balance Sheet that you
manually add)
b. 2019 Income Statement
c. 2019 Statement of Cash Flows
2. Ratio Analysis in a separate sheet
Please complete all calculations in your spreadsheet. Clearly label all worksheets in your spreadsheet so I
can easily follow your work. Your written paper should include a brief introduction and conclusion and
answer the questions below, using the calculations in your spreadsheet for support. Clearly state which
items in your spreadsheet you are referring to in your paper (use the column letter and row number).
Using the financial statements of the firm you selected, answer the following questions:
Introduction Questions (20%, your introduction and conclusion are included in this 10%):
1. Briefly describe your firm, including the products and services it sells. Include any other
information you believe is relevant to the focus of this paper (financial analysis of a real world
company). This should be only 1-2 paragraphs.
Chapter 3 Questions (50%) (see below for information on downloading the financial statements in Excel):
2. Create Common Size:
a. Income Statement (include this in your Income Statement worksheet)
b. Balance Sheet (include this in your Balance Sheet worksheet)
c. What three (3) observations can you make for each statement?
i. Three (3) for balance sheet
ii. Three (3) for income statement
3. Complete the ratio analysis
a. How has the firm’s liquidity changed from 2018 to 2019?
i. Compute the current ratio, quick ratio, cash ratio and net working capital ratio
ii. How does your firm compare to the industry?
b. How has the firm’s long-term solvency changed from 2018 to 2019?
i. Compute the debt ratio, the debt-equity ratio, the equity multiplier and the longterm debt ratio
ii. How does your firm compare to the industry?
c. How has the firm’s ability to meet interest payments changed from 2018 to 2019?
i. Compute the times-interest earned & cash coverage ratio
ii. How does your firm compare to the industry?
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d. How has the firm’s asset management ratios changed from 2018 to 2019?
i. Compute the inventory turnover & days sales in inventory? How would you
interpret these ratios?
ii. Compute the receivables turnover & days sales outstanding? How would you
interpret these ratios?
iii. What is the firm’s total asset turnover and fixed asset turnover? Has the firm
shown improvement in this area?
iv. How does your firm compare to the industry?
e. How has the firm’s profitability changed from 2018 to 2019?
i. Compute the profit margin, return on assets and return on equity
ii. How does your firm compare to the industry?
f. How has the firm’s market value changed from 2018 to 2019? (You will need to find the
stock price as of the end of the firm’s fiscal year to compute these ratios)
i. Compute the PE ratio, the market to book ratio and the EBITDA ratios
ii. How does your firm compare to the industry?
4. Using Dupont analysis, show how the firm’s ROE has changed from 2018 to 2019. What are the
significant changes that most impacted the change in the firm’s ROE?
Chapter 4 Questions (30%):
5. Using finance.yahoo.com, find the expected growth rate in sales for your firm
a. See below for more details
6. Using this growth rate, project out the 2020 Income Statement (include this in your Income
Statement worksheet)
a. Assumptions
i. The following items will vary with sales (use the 2019 Income Statement to
determine each item’s percent of sales)
 COGS
 S,G & A
 Other Income
 There may be others, use your own judgement here and highlight (in
yellow) all items that vary with sales in your worksheet
ii. Assume the following items will not change in 2020
 Depreciation and Amortization (if stated on the Income Statement)
 Interest
 Any expenses related to debt
 There may be others, use your own judgement here and highlight (in any
color other than yellow) all items that do not vary with sales in your
worksheet
7. Determine how much the firm will pay out in dividends and what the Additions to Retained
Earnings will be:
a. You will need to make a realistic assumption
i. The most the firm can pay out in dividends is the projected Net Income for 2020
ii. The least the firm can pay out in dividends is zero
iii. You can compute 2019 payout ratio and use that to estimate
 If the payout ratio > 100%, do not use this to estimate
 If the payout ratio > 100%, assume the firm will pay out 50% of the
projected Net Income in dividends in 2020
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iv. Firms can pay out more than 100% of the Net Income earned in dividends. To do
so they will need to use some of the firm’s cash or issue debt or equity. I will leave
this complexity for FIN324. You may use the simplifying assumptions above.
8. Using the Percent of Sales method, project out the 2020 Balance Sheet (include this in your Balance
Sheet worksheet)
a. Assets:
i. The following items will vary with sales:
 All current assets
 PPE
 Operating leases
 Other assets
 There may be others, use your own judgement here and highlight (in
yellow) all items that vary with sales in your worksheet
ii. The following items will not vary with sales:
 Goodwill
 There may be others, use your own judgement here and highlight (in a
color other than yellow) all items that do not vary with sales in your
worksheet
iii. Use the Percent of Sales method for individual line items. Add up the totals for
Total Current Assets and Total Assets
b. Liabilities
i. The following items will vary with sales:
 Accounts payable
 Accrued expenses
 Income taxes payable
 Operating lease expenses
 There may be others, use your own judgement here and highlight (in
yellow) all items that vary with sales in your worksheet
ii. All remaining items in the Liabilities section will not vary with sales. Highlight
these in the same color you used in the Income Statement (not yellow)
iii. Add up the totals for Current Liabilities and Total Liabilities (you may need to add
a row for Total Liabilities to your worksheet)
c. Owners’ Equity
i. The only item that will change is the Retained Earnings. This will depend on the
assumption you have made about Dividends. The Retained Earnings for 2020 will
be equal to the Retained Earnings on the Balance Sheet in 2019 + Additions to
Retained Earnings you projected.
ii. All other line items will remain the same as 2019
iii. Add up the total for Owner’s Equity
Please note: your projected Balance Sheet for 2020 will not balance.
(You are welcome to make your own assumptions, if you do not agree with what I have presented here. If
you decide to make an assumption other than what I have presented here, please clearly state them.)
9. Based on your projections, what is the firm’s External Financing Needed? What recommendations
do you have for the firm to meet these needs? List three (3) waysthe firms can balance the projected
2020 Balance Sheet.
This exam only covers material on Chapters 3 and 4. You will not be tested on Chapter 2 on this take home
exam.
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To help you with this assignment, I have provided some guidance below:
Accessing Materials:
To download financial statements in Excel format
– Download XBRL (this will include most recent 2 years for Balance Sheet, you will need 3. Details
on how to access the 2017 Balance Sheet are provided below)
o Company or fund name, ticker symbol, CIK (Central Index Key), file number, state,
country, or SIC (Standard Industrial Classification)
o Enter company name or use ‘Fast Search’ and enter the firm’s ticker
 ‘Fast Search’ will take you right to the company
o If you entered the company’s name, you will need to click on the CIK number to the left
of the firm you are analyzing
o You will see all of the SEC filings
o Scroll down to find the 2019 10K, click on Interactive Data
o Click on ‘View Excel Document’
 This will download an Excel spreadsheet of all of the firm’s financial statements
o Create a new spreadsheet that only includes
 Income Statement
 Balance Sheet
 Cash Flow Statement
 Keep only the 3 financial statements listed above. Make sure each
financial statement is one 1 worksheet.
o Now you should be ready to complete the ratio analysis
– To Add the 2017 Balance Sheet information:
o Use PDF posted on myCourses for your firm and manually add the 2017 Balance Sheet to
your spreadsheet
 Do your best to add the items
 Line items and names of line items may have changed since 2017
 You only need to add the items relevant to your calculation
 You may need to make some assumptions when adding the earlier balance sheet
 Clearly state any assumptions you make
o Add the Ratio Analysis template posted on myCourses
 You can create this manually, but use the ‘Move or Copy…’ feature in Excel to
copy the entire sheet into your spreadsheet will make this easier for you
 You may only submit 1 spreadsheet with your exam
Data items needed from finance.yahoo.com:
1. Stock Price (at the end of the firm’s fiscal year):
a) Search for the firm you are analyzing (you can search by firm name or ticker)
b) Click on the Historical Data tab
c) You can change the Time Period to quickly find the stock price
d) Use the Close on the date on or before the firm’s fiscal date
2. Projected growth rate in sales:
a) Click on Analysis tab
b) Under ‘Revenue Estimate’ find the Sales Growth estimate for 2020
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Guidelines:
a. Use Averages for Balance Sheet items
i. Long term solvency ratios
ii. Asset Management ratios
iii. Profitability ratios
b. Do not use Averages for Balance Sheet items (use year-end figure)
i. Short term solvency
 Since both numerator and denominator are from the Balance Sheet
ii. Market Value ratios
 Since we want the value of the firm as of the firm’s fiscal date
c. Be sure to use the appropriate stock price (on or before the firm’s fiscal date for each year)
d. Use ‘shares issued and outstanding’ as stated in the Common Stock line item on the balance sheet
for shares outstanding
i. If your firm does not list ‘shares issued and outstanding’, compute (shares issued – treasure
stock)
ii. You should find the firm’s 10K from their investor relations website to find this number
iii. It might be included on the XBRL spreadsheet you downloaded
e. Use Basic EPS (if stated on the income statement)
i. You can also compute this yourself
ii. Do not use diluted (for anything)
f. EBIT is sometimes called ‘Operating Income’ or ‘Income from Operations’ on the Income
Statement
g. Use (Cash + Short Term Investments) for Cash & Equiv. when computing the EBITDA ratio
h. Use ‘Depreciation & Amortization’ for Depreciation
i. Look on the Cash Flow Statement to find this
ii. You may need to sum 2 different line items
i. Read carefully so that all of your numbers are in the same units (thousands, millions, etc.)
j. If your firm lists ‘restrictive cash’ or something like that, you can decide whether or not to include
it in Cash. There is no wrong answer here. Clearly state any and all assumptions you make.
k. To compute the payout ratio for 2019, use the Dividends paid from the Cash Flow Statement and
divide by Net Income.
It is expected that each student or team of students work individually. If there is any evidence of more than
two students working together, all students will receive a zero on this assignment. You are welcome to
reach out to the TAs for guidance. You are also welcome to discuss the assignment with other students in
the class. But, as a graded assignment, you must submit your own work. Each student or team of students
will submit the required documents.


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