ACCT 202 - Principles of Accounting II

Excel Financial Analysis Assignment TURN IN: Upload your excel file to eLearn.
Spring 2017 Abram Rhodes

PART I. Using horizontal analysis and 2012 as the base year, calculate Trend Percentages for each of the
Income Statement items. You MUST enter formulas into the cells to compute the percentages. (Format the
Trend Percentage cells for "%")
Trend Percentages
Yr Ended YrEnded Yr Ended Yr Ended YrEnded Yr Ended
12/31/14 12/31/13 12/31/12 12/31/14 12/31/13 12/31/12
Sales $950,000 $830,000 $500,000 190% 166% 100%
Less Cost of Goods Sold 510,000 430,000 290,000 176% 148% 100%
Gross Profit 440,000 400,000 210,000 210% 190% 100%
Less General & Admin expenses 75,000 60,000 55,000 136% 109% 100%
Less Selling Expenses 80,000 70,000 40,000 200% 175% 100%
Net Income 285,000 270,000 115,000 248% 235% 100%

Are the above trends favorable

or unfavorable? EXPLAIN WHY. Favorable. Both the gross profit and net income increase with each year. If the trend were to
Enter response in cell to the right. continue then the company would continue to bring in more money each year.

PART II. Using vertical analysis, prepare a common size comparative balance sheet. You MUST enter
formulas into the cells to compute the percentages. (Format the common size comparative balance sheet
cells for "%")

Common Size Comparative

Balance Sheet
12/31/14 12/31/13 12/31/14 12/31/13
Assets
Cash $190,000 $220,000 15% 18%
Short-term Investments 95,000 60,000 8% 5%
Accounts Receivable 120,000 160,000 10% 13%
Inventory 105,000 90,000 9% 7%
Land 100,000 80,000 8% 7%
Plant and Equipment 740,000 710,000 60% 58%
Accumulated Depreciation (120,000) (100,000) -10% -8%
Total Assets 1,230,000 1,220,000 100% 100%

Liabilities & Stockholders' Equity

Current Liabilities $240,000 $340,000 20% 28%
Long-term Notes Payable 220,000 190,000 18% 16%
Common Stock 400,000 400,000 33% 33%
Retained Earnings 370,000 290,000 30% 24%
Total Liabilities and Stockholders'
Equity 1,230,000 1,220,000 100% 100%

How would you evaluate the

common size comparative
Balance Sheets? Favorable or
unfavorable and WHY? Enter Between more total assets, investments, and retained earnings, with less current
response in cell to the right. liabilities, I feel as though the company is looking more favorable.

PART III. Using the above information calculate the following 2014 ratios.

As an example for you to follow, the Current ratio has been calculated for
you: To see the formula entered click on the 510,000 in cell B41. In the
Formula Bar at the top of the screen you will see the formula to add all of
the current assets for the numerator. Click on the 2.125 in cell D41. In the
Formula Bar at the top of the screen you will see the formula to calculate
the current ratio.
Show the
component parts
of the ratio in this Calculate the ratio
column in this column
Current Ratio for 2014
Current Assets 510,000 = 2.125
Current Liabilities 240,000

Quick (Acid test) Ratio for 2014

Quick Assets 405,000.00 = 1.688
Current Liabilities 240,000.00

2014 Inventory Turnover

Cost of Goods Sold 510,000.00 = 5.231
Average Inventory 97,500.00

2014 Days Sales Uncollected:

End. Accounts Receivable x 365 120,000 = 46.105
Sales $ 950,000.00 Days

Debt Ratio for 2014:

Total Liabilities $240,000 = 20%
Total Liabilities+Stockholders'Equity 1,230,000

Profit Margin for 2014:

Net Income 285,000 = 30%
Net Sales $950,000