BUSN460 Individual Financial Analysis Project

Student Name:
Instructions:
Go to the CanGo intranet found in the Report Guide tab under Course Home
Use the financial statements from the most recent year to fill in the table below.
You may find some formulae calling for an average, e.g., average inventory, average receivables.
Because we only have the Balance sheet for one year, you can only use the one year number not an average.
Assume interest expense is $0.00
Be careful of the Debt equity ratio. The review covers debt asset ratio as an example of how to calculate ratios and that is different from debt equity ratio,
and that is different from the debt equity ratio so think about how you calculate the debt equity ratio using the debt asset ratio as an example.
Be sure to cite your references
Green boxes to be filled in by instructor
Ratio Formula (express the ratio
in words)
Detailed calculation (actual
numbers from financial
statements used for the
calculation)
Final number
(final result of
the detailed
calculation)
Example: Term A/Term B (Term A
divided by Term B)
1000/2000 .50
Efficiency Ratio:
Receivables
Turnover
Net Sales/Average Gross
Receivables 50,000,000/31,120,000 1.6
Grade for above
Efficiency Ratio:
Inventory
Turnover
Cost of Goods Sold/Average
Inventory 9,000,000/32,000,000 0.28
Grade for above
Financial
Leverage Ratio:
Debt/Equity Ratio Total Debt/Total Equity 57,400,000/141,000,000 0.4
Grade for above
Liquidity Ratio:
Current Ratio
Current Assets/Current
Liabilities 202,900,000/37,500,000 5.4
Grade for above
Liquidity Ratio:
Quick Ratio
Cash + Marketable Securities
+ Accounts
Receivable/Current Liabilities
20,900,000 + 117,000,000 +
32,120,000/37,500,000 4.5
Grade for above
Liquidity: Working
Capital
Current Assets-Current
Liabilities 202,900,000 - 37,500,000 165,400,000
Grade for above
Profitability Ratio:
Return on Assets
Net Income/(Beginning
Assets + Ending Assets)/2
5,486,000/(170,020,000 +
235,900,000)/2 0.03
Grade for above
Profitability Ratio:
Return on Sales Net Income/Net Sales 5,486,000/50,000,000 0.11
Grade for above
Total Earned
Points
Credit Research Foundation. (1999). Ratios and Formulas in Customer Financial Analysis. Retrieved March 21, 2014, from CRF:
http://www.crfonline.org/orc/cro/cro-16.html
Because we only have the Balance sheet for one year, you can only use the one year number not an average.
Be careful of the Debt equity ratio. The review covers debt asset ratio as an example of how to calculate ratios and that is different from debt equity ratio,
and that is different from the debt equity ratio so think about how you calculate the debt equity ratio using the debt asset ratio as an example.
Explanation of why ratio is important Earned points
(up to 3 points
per "box"/cell)
Instructor feedback
This is the explanation of the role of this ratio and why it is important 3
Indicates the liquidity of the company's receivables.
0.0
Indicates the liquidity of the inventory.
0.0
Indicates how well creditors are protected in case of the company's
insolvency
0.0
Provides an indication of the liquidity of the business by comparing the
amount of current assets to current liabilities.
0.0
A measurement of the liquidity position of the business. The quick ratio
compares the cash plus cash equivalents and accounts receivable to the
current liabilities.
0.0
Working capital compares current assets to current liabilities, and serves
as the liquid reserve available to satisfy contingencies and uncertainties.
A high working capital balance is mandated if the entity is unable to
borrow on short notice. The ratio indicates the short-term solvency of a
business and in determining if a firm can pay its current liabilities when
due.
0.0
Measures the company's ability to utilize its assets to create profits.
0.0
A measure of net income dollars generated by each dollar of sales
0.0
0.0
Credit Research Foundation. (1999). Ratios and Formulas in Customer Financial Analysis. Retrieved March 21, 2014, from CRF:
http://www.crfonline.org/orc/cro/cro-16.html