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BUSN460 Individual Financial Analysis Project

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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 equit
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
Detailed calculation Final number
Formula (express the ratio (actual numbers from (final result of
Ratio
in words) financial statements used the detailed
for the calculation) calculation)

Term A/Term B (Term A divided


Example: 1111/1111 .11
by Term B)

Efficiency Ratio: Receivables


Net Sales / Net Debtors 11,111,111 / 11,111,111 1.11
Turnover

Grade for above


Efficiency Ratio: Inventory
Cost of Goods Sold / Inventory 1,111,111 / 11,111,111 1.11
Turnover

Grade for above

Financial Leverage Ratio:


Total Debt / Total Equity 11,111,111 / 111,111,111 1.11
Debt/Equity Ratio

Grade for above

Current Assets / Current


Liquidity Ratio: Current Ratio 111,111,111 / 11,111,111 1.11
Liabilities

Grade for above

(Current Assets - Inventory) /


Liquidity Ratio: Quick Ratio 111,111,111 / 11,111,111 1.11
Current Liabilities

Grade for above


Current Assets - Current
Liquidity: Working Capital 111,111,111 - 11,111,111 1 111,111,111
Liabilities

Grade for above

Adjusted Net Income from


Profitability Ratio: Return on
continuing Operations / Total 1,111,111 / 111,111,111 1.11%
Assets
Tangible Assets

Grade for above

Profitability Ratio: Return on Operating Profit from continuing


1,111,111 / 11,111,111 11.11%
Sales operation / Net Sales

Grade for above


Total Earned Points

Source: https://www.crfonline.org/orc/cro/cro-16.html
atios and that is different from debt equity ratio,
g the debt asset ratio as an example.

Earned points
Explanation of why ratio is
(up to 3 points Instructor feedback
important
per "box"/cell)

This is the explanation of the role of


3
this ratio and why it is important

The ratio is important from the


perspective that it reflects the
efficiency of management in
managing its debtors and reflects
how many times in a year the firm
collects money from its debtors.
Higher the ratio better is the debtor
management policy and lesses would
be the funds blocked in debtors and
hence lesser requirement of working
capital
0.0
This ratio is also an efficiency ratio
which is critical and reflects the
number of times in a year the
inventory gets converts into sale.
Higher the ratio better is the
efficiency and hence higher sales
0.0

This reflect the amount of debt vs.


amount of equity on the balance
sheet. Use of debt provide tax shield
as interest on debt is tax deductible
while dividends on equity are not and
hence debt is cheapest source of
funds. Use of debt as growth capital
in a prudent manner has capability to
enhance return on equity and also
return on assets

0.0

This is an important measurement of


liquidity. Ratio higher than 1 reflects
that there is adequate liquidity
available in the firm to pay short
term liabilities. However, this ratios
needs to be further analyzed in term
s of quality of debtors and inventory

0.0

This is also an important


measurement of liquidity. Ratio
higher than 1 reflects that there is
adequate liquidity available in the
firm to pay short term liabilities.
However, this ratio is different than
current ratio as it ignores the effect
of inventory in current assets

0.0
This reflects the amount of funds
blocked in working capital. Better the
management and efficiency lesser
would be this amount. However,
working capital in isolation is of no
use unless it is compared with net
sales.
0.0

This is an important measurement of


profitability on assets. This reflects
how efficiently the assets are utilized
to generate best profits for equity
shareholders. Higher the percentage
better would be the performance

0.0
This is another measure of
profitability which shows the
operating profit margin. This shows
how much profitability (before
interest and taxes) the firm is earning
on its net sales. Here as well higher
the ratio better would be the
performance
0.0
0.0
Balance Sheet
LIABILITIES AND OWNERS' EQUITY 31-Dec-09
Accounts Payable 111,111,111
Accrued Advertising 111,111,111
Other Liabilities and Accrued Expense 11,111,111
Current Portion of Long-Term Debt 11,111,111

Long Term Debt 111,111,111

Preferred Stock, $100 par value per share,


100,000 authorized, 0 shares issued and outstanding 11

Common Stock, $1 par value per share,


250,000,000 shares authorized, 13,000,000 shares
issued, 12,900,000 outstanding 111,111,111

Additional Paid-in-Capital in excess of par value, Common Stock 1111,111,111

Treasury Stock (11,111,111)

Retained Earnings (less Cash Dividends Paid) 111,111,111

Total Liabilities and Owner's Equity 1111,111,111

Total Equity 1111,111,111


Tangible Equity 1111,111,111
Total Debt 111,111,111
ASSETS 31-Dec-09
Cash 111,111,111
Marketable Securities 1111,111,111
Accounts Receivable 111,111,111
Less: Allowance for Bad Debts (1111,111)
Net Accounts Receivable 111,111,111

Inventory
Raw Materials 11,111,111
Work-in-process 11,111,111
Finished Goods 11,111,111
Inventory Purchased for Resale 111,111,111
Total Inventory 111,111,111

Plant, Property and Equipment 11,111,111


Less: Accumulated Depreciation (1111,111)
Net Plant, Property and Equipment 11,111,111

Prepaid Expenses 1111,111

Goodwill and Other Purchased Intangibles 111,111,111


Less: Amortization (1111,111)
Net Goodwill and Other Purchased Intangibles 111,111,111

Total Assets 1111,111,111

Tangible Assets 1111,111,111

Current Assets 1111,111,111


31-Dec-09
Sales Revenues 111,111,111
Less: Sales Returns (11,111,111)
Net Sales Revenues 111,111,111
Less: Cost of Goods Sold (11,111,111)
Gross Profit 111,111,111

Operating Expenses:
Advertising and Sales (111,111,111)
Depreciation (1111,111)
Salaries and Wages (11,111,111)
Product Development (11,111,111)
Merger and Acquisition Related Costs, including
Amortization of Goodwill and Other Intangibles (1111,111)
Total Operating Expenses (111,111,111)

Income from Continuing Operations Before Income Taxes 11,111,111

Less: Income Taxes at 35% (11,111,111)


Income from Continuing Operations 11,111,111

Discontinued Operations:
Income from Operations of Discontinued Division
(less applicable income taxes) 1111,111
Loss on Disposal of Discontinued Division
(less applicable income taxes) (1111,111)
Total Gain from Discontinued Operations 1111,111

Extraordinary Items:
Loss from fire (less applicable income taxes) (1111,111)

Net Income 11,111,111


31-Dec-08
111,111,111
(1111,111)
111,111,111
(11,111,111)
11,111,111

(11,111,111)

(11,111,111)
(11,111,111)

11
Divisional Revenues
Books 111,111,111
Online gaming 111,111,111
Customized MP3/CD/DVD 111,111,111
Customized MP3/CD/DVD Inventory at end of 2009 11,111,111
11,111,111

11,111,111