Financial Statement Analysis Project
Financial Statement Analysis Project
Financial Statement Analysis Project
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(This project is valued at 5% of the final grade.)<br />
<strong>Financial</strong> <strong>Statement</strong> <strong>Analysis</strong> provides information that indicates how a company is<br />
performing. By comparing financial statements of different years, a manager can make<br />
informed decisions about investments, expenditures, and activities that impact revenues.<br />
Directions: Read the chapter in the text titled “<strong>Financial</strong> <strong>Statement</strong> <strong>Analysis</strong>.” Using the<br />
comparative financial statements for Baby Cakes International Inc. (see<br />
“BabyCakes_<strong>Financial</strong>_<strong>Project</strong>_Data.xls” linked in the lesson activities) , complete the<br />
following tasks.<br />
Note: The market price of BabyCakes Int’l, Inc. common stock was $20 on December 31,<br />
2008.<br />
Part A:<br />
Complete the calculations for the 19 items listed below.<br />
Determine the following measures for the year 2008:<br />
1. 1. Working Capital<br />
2. 2. Current ratio<br />
3. 3. Quick ratio<br />
4. 4. Accounts receivable turnover<br />
5. 5. Number of days’ sales in receivables<br />
6. 6. Inventory turnover<br />
7. 7. Number of days’ sales in inventory<br />
8. 8. Ratio of fixed assets to long-term liabilities
9. 9. Ratio of liabilities to stockholders’ equity<br />
10.Number of times interest charges earned<br />
11.Number of times preferred dividends earned<br />
12.Ratio of net sales to assets<br />
13.Rate earned on total assets<br />
14.Rate earned on stockholders’ equity<br />
15.Rate earned on common stockholder’s equity<br />
16.Earnings per share on common stock<br />
17.Price-earnings ratio<br />
18.Dividends per share of common stock<br />
19.Dividend yield<br />
Part B:<br />
Explain what the result of each measure indicates about the company.<br />
Part C:<br />
Complete a horizontal analysis for the Income <strong>Statement</strong>, and explain<br />
your findings.<br />
Part D:<br />
Complete a vertical analysis for the Income <strong>Statement</strong>, and explain your<br />
findings.