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