Financial Statement Analysis

• A brief written document (1-2 page single spaced) evaluating a company’s financial ratios, comprising the following four sections: Section I—A brief (1-3 sentences) summary of the company’s business and the economic environment in which it operates. Section II—A brief evaluation over time of the company’s: - Return on equity (ROE), - DuPont ratio components (profitability, efficiency and leverage), and - LT Debt-to-Assets ratio Section III—A brief evaluation over time of the company’s: - Cash conversion cycle - Cash liquidity and Cash Sources & Uses Section IV— A brief (e.g., 1-2 sentence) description of the overall ratio trend and what it implies for current and future financial performance. • A completed table of ratios and other financial statement measures for the company selected FINANCIAL STATEMENT ANALYSIS—YOUR COMPANY Company name: Company ticker: Your name and cohort: Ratios and Other Analysis Measures Year End (3 years) ROE and DuPont Ratios ROE (NI / OEavg) Profitability (NI / Sales) Efficiency (Turnover = Sales / Assetsavg) Leverage (Leverage = Assetsavg / OEavg) Additional Efficiency Ratios AR Turnover (Sales / ARavg) Days Receivables Outstanding (DRO) (365 / AR Turnover) Inventory Turnover (COGS / Inventoryavg) Days Inventory (DI) (365 / Inventory Turnover) AP Turnover (Purchases / APavg) Days Payables Outstanding (DPO) (365 / AP Turnover) CASH CONVERSION CYCLE (DI – DPO + DRO) Additional Leverage Ratio LT Debt-to-Assets (LT Debt, incl current portion / Total Assets) Cash Liquidity, Cash Sources & Uses Working capital (CA – CL) Current ratio (CA / CL) Quick Ratio [(Cash + ST Securities + AR) / CL)]