(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.
Part A:
Complete the calculations for the 19 items
listed below.
Determine the following measures for the year 2008:
1.
Working Capital
2.
Current ratio
3.
Quick ratio
4.
Accounts receivable turnover
5.
Number of days’ sales in receivables
6.
Inventory turnover
7.
Number of days’ sales in inventory
8.
Ratio of fixed assets to long-term liabilities
9.
Ratio of liabilities to stockholders’ equity
10.Number
of times interest charges earned
11.Number
of times preferred dividends earned
12.Ratio
of net sales to assets
13.Rate
earned on total assets
14.Rate
earned on stockholders’ equity
15.Rate
earned on common stockholder’s equity
16.Earnings
per share on common stock
17.Price-earnings
ratio
18.Dividends
per share of common stock
19.Dividend
yield
Part B:
Explain what the result of each measure
indicates about the company.
Part C:
Complete a horizontal analysis for the Income
Statement, and explain your findings.
Part D:
Complete a vertical analysis for the Income
Statement, and explain your findings.
