Your Company #2 - Financial Statement Trends

Your Company #2 – Financial Statement Trends

Common-Size Financial Statements is a powerful analytical tool that is helpful in highlighting relations in a financial statement. Common-size balance sheets express all amounts as a percentage of total assets. Common-size income statements express all items as a percentage of total revenues. Common-size statements of cash flows express amounts as a percentage of cash flows from operations. Common-size percentages provide an insightful overview of financial position and operating performance.

Another powerful analytical tool is Percentage Change Financial Statements. This analytical tool is helpful in highlighting the relative rates of growth in financial statement amounts from year to year and over longer periods of time. The percentage change in an amount is generally presented as the percentage change in the amount of an item relative to its amount in the previous period, or the compounded average percentage change over several prior periods.

Analyze the financial statement trends for Your Company.

1. Use the same FSAP 9e spreadsheet you created for the “Your Company (YC) #1 assignment. This is a financial statement analysis spreadsheet template file accompanying the Financial Reporting, Financial Statement Analysis and Valuation textbook.
2. Ensure that the data used in the analysis is correct before beginning this assignment. All the cells in lines 154 thru 156 (FINANCIAL DATA CHECKS) on the "Data" tab, and lines 14 thru 17 (DATA CHECKS) on the “Analysis” tab of the “FSAP 9e” spreadsheet file MUST show "0" as the calculated amounts.
3. Select File > Save As and rename your spreadsheet as “ACG 5153 YC2 LastName FirstName”.
4. Add a new spreadsheet tab to the file. Name the tab “Income Statement Trends”.
   1. 1. Use the data from the common-size balance sheet and income statement growth rates in the "Analysis" tab, lines 128 thru 191 (INCOME STATEMENT ITEMS AS A PERCENT OF REVENUES and INCOME STATEMENT ITEMS: GROWTH RATES), to evaluate revenue and expense trends over the five-year period.
      2. In the "Income Statement Trends" spreadsheet tab, discuss the positive or negative income statement trends that are evident over the five-year period for ALL of the revenue and expense accounts.
      3. In your comments, provide a reason or reasons why these trends have occurred. Cite information in Your Company's Annual Reports including management's comments, the schedules and notes therein, and other reliable published information about the company and the industry it operates in to support your comments.
5. Add another new spreadsheet tab to the file. Name the tab “Balance Sheet Trends”.

1. 1. 1. Use the data from the common-size balance sheet and balance growth rates in the "Analysis" tab, lines 195 thru 295 (COMMON SIZE BALANCE SHEET – AS A PERCENT OF TOTAL ASSETS and BALANCE SHEET ITEMS: GROWTH RATES), to evaluate balance sheet trends over the five-year period.
      2. In the "Balance Sheet Trends" spreadsheet tab, discuss the positive or negative balance sheet trends that are evident over the five-year period for ALL of the balance sheet accounts.
      3. In your comments, provide a reason or reasons why these trends have occurred. Cite information in Your Company's Annual Reports including management's comments, the schedules and notes therein, and other reliable published information about the company and the industry it operates in to support your comments.

6. Create another new spreadsheet tab in the file. Name the tab “Common-size Statement of Cash Flows”.

1. 1. 1. Copy and paste the data (values) from the STATEMENT OF CASH FLOWS: SUMMARY, lines 363 thru 388 in the "Analysis" tab and use the data to prepare common-size Statements of Cash Flows for the five-year period. See the common-size statements presented in Exhibit 3.25 on page 178 of the Wahlen textbook.Download Exhibit 3.25 on page 178 of the Wahlen textbook.
      2. Format the common-size statements for Your Company (columns and numbers) so they are professionally presented like those in Exhibit 3.25.

7. Add another new spreadsheet tab to the file. Name the tab “Statement of Cash Flows Trends”.

1. 1. 1. Use your common-size Statements of Cash Flows to evaluate cash flow trends over the five-year period.
      2. On the "Statement of Cash Flows Trends" spreadsheet, discuss positive or negative cash flow trends that are evident of the five-year period for ALL operating, investing, and financing activities cash flows on the statements.
      3. In your comments, provide a reason or reasons why these trends have occurred. Cite information in Your Company's Annual Reports including management's comments, the schedules and notes therein, and other reliable published information about the company and the industry it operates in to support your comments.

8. Save the data you entered in your spreadsheet file named as “ACG 5153 YC2 LastName FirstName”.

9. Review the Rubric for Assignment Your Company #2 to ensure that your completed assignment meets the grading criteria.

10. Submit your completed assignment in Canvas in the Your Company #2 - Financial Statement Trends assignment by the due date and time.