Assignment Instructions/ Description
You will need to select a current publicly traded company on the stock exchanges
You will need to select a current publicly traded company on the stock exchanges. You will not receive a grade if you choose a company that is private, has been sold, or no longer traded on the exchanges. There will be no time to redo your analysis.
You will need 2 attachments:
A- Excel to do next year’s pro forma analysis and the financial ratios (total of 20). If you don’t use Excel, you will not receive a credit on these portions. Remember that Excel (as a spread sheet, but not used as a text) is a requirement in this class. If you want, you can add the EVA calculations to Excel as well.
B- Word document for the rest. There is no need for you to copy the tables from Excel into Word. You can refer to these tables in your write-up.
The total number of pages for Excel and Word documents should be 8-10 pages.
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Please use sub-titles to organize your work.
First bullet:(word document) introduce the company, products, and major announcements/
Second bullet:(Excel and word) In excel show the latest financial data. In word analyze the financial data.
Third bullet: (Excel)
Pro Forma
1- Next to the financial statements, add extra two columns that you will use; one is used for the bases for your calculations ((i.e. sales increased by 10%, etc.), and the second is for the actual results in $ (label that column as “20xx Proforma”.
2- Follow the example (step-by-step) shown in chapter 3 of the text for both the balance sheet and the income statement.
What do I want to see in Excel?
a- When I click on your calculated numbers, I should see your detailed calculations, not hand entered numbers where you are supposed to calculate the correct numbers. That means, never to use your manual calculator. The simple rule here is to “show all calculations”.
b- You must show a complete income statement and a complete balance sheet (please do not reduce or condense them on your own)
Very, very important:
Pro forma: since you are making changes to the company’s financial data, your calculated pro forma balance sheet will not balance. This is expected but not acceptable. The balance sheet MUST balance.
To balance a pro forma balance sheet you have two options:
1- Add a new line item at the end of the liability section (before the total) and label it as “External financing required” (the text explain it as “plug figure”). This number must be positive.
OR, to:
2- Reduce the long-term liability (but never to increase it). Be sure to explain why? Next to the long-term liability figure
Note: you have to select either option (not both) as deemed necessary to be able to balance the balance sheet. You will need to explain your entry. Please do not change some numbers to balance, this will not be acceptable.
Fourth Bullet:(Excel for the calculations and word for analysis)
The financial ratios:
1- The ratios are to be posted in a new tab in Excel
2- You should use the numbers from the financial statements (not the pro forma). If different, explain why?
3- Write the formula before you attempt to solve for the ratio, i.e. Current ratio = current assets / current liabilities, follow that by the actual numbers, calculate the result, and write an explanation of each ratio’s impact on the company. Show the ratio calculations in a table
4- You need to calculate 20 financial ratios. See the final paper instructions.
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