Project 1 - Financial Statements
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FIN6406 - Financial Management
Project – Financial Analysis 1
Instructions
The project will teach you how to perform a financial analysis on a set of financials. A financial
analysis report is constructed by a person who is researching a company, usually with the intent
of recommending its stock to investors or to a board of directors. The report contains multiple
components, such as company overview, investment essentials, valuation, risk analysis, and a
summary. However, for the purpose of this class, we will focus on the investment essentials. In
this component – “investment essentials”, you will need to analyze the financials by using ratio
analysis, trend analysis, and provide a quick summary of your findings.
You as manager need to fully understand your role in the budgetary process. It is the most basic
financial planning and control tool. Every manager needs to know what costs are associated with
their department, and how in relation are they doing to that budget. You might achieve your
departmental goals, but if you go over budget in order to achieve those goals, you create
financial problems for the company and jeopardize your own job performance review. In most
cases, part of your performance appraisal will be based on whether you were within budget for
the year.
Income statements show the results of a company’s operations, which are usually given quarterly
or by fiscal year. It shows the sales, also known as revenue, and expenses. It also shows
whether the company had a profit or loss during that period. The Income Statement is also
known as the “Profit & Loss” statement or “P&L.” Simply put, the formula is: “Revenue –
Expenses = Income.” The easiest and best scenario is, “The higher the sales and the lower the
expenses, the greater the income.” There are all types of expenses that are generated in a
company and this statement sees how the company is spending its money, and how management
is most and least effective.
As previously described, the Balance Sheet shows the value in the company’s accounts at a
certain period, whereas the Income Statement covers operations over an entire period.
Please recreate the financial statements below using excel. Please keep in mind that the financial
statements below are unaudited. Therefore, there may be some errors found on both statements.
Once the financial statements are recreated, please complete the following:
1.
Prepare a common size income statement (10pts)
2.
Prepare a common size balance sheet (10pts)
3.
Prepare a trend analysis for the historical data for both financial statements and answer
the following questions (30pts)
a.
What conclusion can you draw about Sales/Revenues between 2019 and 2020?
b.
What conclusion can you draw about COGS?
c.
What conclusion can you draw on Cash as a percentage of Total Assets?
d.
What conclusion can you draw on Inventory as a percentage of Total Assets?
4.
Use the sheet labelled Notes on Financial Ratio Formula to calculate 3 ratios from each
category for years 2019 and 2020 (20pts)
5.
Prepare a pro-forma income statement – project income statement for years 2021 – 2022
– 2023. (15pts)
6.
If total revenue grows by 10 percent in 2021, what is the company’s net income? (15pts)
Please provide only excel file – all comments should be listed on the excel file.
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Related Questions
Providing information about the performance and
financial position of companies so that users can make
economic decisions best describes the role of:
Select one:
O a. Financial reporting.
O b. Financial statement analysis.
O c. Auditing.
arrow_forward
Review Later
Which function of the S&P Capital IQ Excel plug-in allows users to extract company data directly
from CaplQ's database and calculate the desired financial metrics using the CaplQ formulas?
Screening
Auditing
Templates
Formula Builder
Page 9 of 10
00
arrow_forward
Financial Modeling Practices
Financial modeling professionals typically break their work down into modular steps
for ease and transparency, before linking everything back to the three core financial
statements.
Corkscrew schedules are primarily used to support calculations for which financial
statement?
Cash Flow Statement
Income Statement
Statement of Operations
Balance Sheet
arrow_forward
Explain the functions of financial management based on the given references
Reference: Fundamentals of Financial Management by James C. Van Horne and John M. Wachowicz, Jr. (the book)
arrow_forward
Give typing answer with explanation and conclusion
arrow_forward
Please read the e-textbook on Managerial Accounting Basics (pp.643-646, indicated as page 304 305 in VitalSource) and answer the following
question.
Managers explain and voluntarily disclose the forecasted financial information to the external financial users at the beginning of the period. The purpose
to provide the forecasted financial information is to help the external investors interpret managers' forecasted earnings by examining the profitability of
the firm when the investors forecast the earnings and make investment decision.
Discuss the extent to which you agree/disagree with that trend? You should support your reasoning with example(s).
arrow_forward
Can you show me a concept map, mind map or whatever .... of financial management?
arrow_forward
Briefly tell us how you approach problems from a quantitative and qualitative perspective. ( Financial Management intern position)
arrow_forward
Suppose you are tasked to construct and evaluate complex financial statements, including those relating to group accounts, to show an organization's financial position and performance. How do SASB standards relate to your task?
arrow_forward
Window Dressing is done by (may have more than one answer)?
Check All That Apply
Financial Analysts
Accountants
Auditors
Managers
arrow_forward
Who will be a user of financial statements, and what will they be used for?
Question 17 options:
Lenders will use financial statements to decide whether to invest in a company.
Investors will use financial statements to decide whether to lend money to a company.
The marketing department is interested in the operating income figures in the financial statements.
Managers will use financial statements to make decisions about their company.
arrow_forward
Analysts gather additional information to provide insight about management’s financial statements. Discuss the importance of doing the following:
considering the financial reporting history of the company.
investigating large and unusual changes in reported items.
arrow_forward
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
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6) If you are the Management Accountant of a company, you would be primarily concerned with:
a.
Providing useful information to external users
b.
Reporting of past data
c.
Helping the management in preparing plans and forecasts for future activities of business
d.
The annual reporting of company’s financial performance
arrow_forward
None
arrow_forward
Which of the following is a crucial skill for a financial modeler? Question 9 Select one: A. Communication B. Design C.
Accounting D. All of the Above
arrow_forward
As an Investment Analyst who researches and analyses markets, companies, and stocks to be invested in. provide an analysis of Microsoft in paragraph format
arrow_forward
Describe an accountant’s role Systems Development Life Cycle (SDLC)?
arrow_forward
The person MOST likely to use management accounting information is a:
Select one:
O a. banker evaluating a credit application.
Ob. shareholder evaluating a stock investment.
Oc assembly department supervisor.
Od. governmental taxing authority.
arrow_forward
Management accounting information:
A.helps shareholders make decisions
B.is used by lenders to make credit decisions
C.is a one-size-fits-all approach to reporting business results
D.can be tailored to the needs of the internal user
arrow_forward
The accounting system should provide information for:
Select one:
O A. Reporting actual performance to managers
O B. Strategic decisions
O C.
Preparation of financial statements
O D. All of the above.
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Which statement is correct:
Select one:
a.
Management accounting’s focus and emphasis is on past-oriented reports.
b.
The purpose of financial information in management accounting is to communicate organization's financial position to investors, banks, regulators, and suppliers.
c.
All statements are correct.
d.
Management accounting focuses on measuring, analyzing, and reporting financial and nonfinancial information to help managers estimate future revenue, costs, and other measures to forecast activities and formulate strategies to increase the competitive advantage of the organization.
e.
In management accounting, rules of measurement reporting require financial statements, e.g. prepared for the budgeting purpose, to be prepared in accordance of GaAAP.
arrow_forward
Indicate whether each statement describes financial accounting or managerial accounting.A. The information is directed at external users who are making decisions pertaining to investing,extending credit, and other decisions.B. The principal users are the organization’s managers.C. The key focus is on the entity as a whole.D. The rules and principles are very flexible.E. The information gathered is usually available after an independent audit has been completed.
arrow_forward
The primary goal of management accounting is to:
Select one:
O A. provide information to current and potential investors in the company
O B.
provide information to creditors as well as current and prospective investors
O C.
provide information to creditors, taxing authorities, and current and prospective investors
O D. provide information for internal management to assist them in planning, control and decision making
arrow_forward
Important components of the financial environment and a developed financial system include:
a. Investment and financial management
b. Financial markets and bond markets
c. Security markets and financial institution
d. Financial institution & markets, investment, and financial management
Please provide me the correct answer and don't reject this question as I need a help on this important question.
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- Providing information about the performance and financial position of companies so that users can make economic decisions best describes the role of: Select one: O a. Financial reporting. O b. Financial statement analysis. O c. Auditing.arrow_forwardReview Later Which function of the S&P Capital IQ Excel plug-in allows users to extract company data directly from CaplQ's database and calculate the desired financial metrics using the CaplQ formulas? Screening Auditing Templates Formula Builder Page 9 of 10 00arrow_forwardFinancial Modeling Practices Financial modeling professionals typically break their work down into modular steps for ease and transparency, before linking everything back to the three core financial statements. Corkscrew schedules are primarily used to support calculations for which financial statement? Cash Flow Statement Income Statement Statement of Operations Balance Sheetarrow_forward
- Explain the functions of financial management based on the given references Reference: Fundamentals of Financial Management by James C. Van Horne and John M. Wachowicz, Jr. (the book)arrow_forwardGive typing answer with explanation and conclusionarrow_forwardPlease read the e-textbook on Managerial Accounting Basics (pp.643-646, indicated as page 304 305 in VitalSource) and answer the following question. Managers explain and voluntarily disclose the forecasted financial information to the external financial users at the beginning of the period. The purpose to provide the forecasted financial information is to help the external investors interpret managers' forecasted earnings by examining the profitability of the firm when the investors forecast the earnings and make investment decision. Discuss the extent to which you agree/disagree with that trend? You should support your reasoning with example(s).arrow_forward
- Can you show me a concept map, mind map or whatever .... of financial management?arrow_forwardBriefly tell us how you approach problems from a quantitative and qualitative perspective. ( Financial Management intern position)arrow_forwardSuppose you are tasked to construct and evaluate complex financial statements, including those relating to group accounts, to show an organization's financial position and performance. How do SASB standards relate to your task?arrow_forward
- Window Dressing is done by (may have more than one answer)? Check All That Apply Financial Analysts Accountants Auditors Managersarrow_forwardWho will be a user of financial statements, and what will they be used for? Question 17 options: Lenders will use financial statements to decide whether to invest in a company. Investors will use financial statements to decide whether to lend money to a company. The marketing department is interested in the operating income figures in the financial statements. Managers will use financial statements to make decisions about their company.arrow_forwardAnalysts gather additional information to provide insight about management’s financial statements. Discuss the importance of doing the following: considering the financial reporting history of the company. investigating large and unusual changes in reported items.arrow_forward
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SEE MORE QUESTIONS
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Recommended textbooks for you
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
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Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning