ADM 537 Workshop Two 2.3 Dropbox Financial Statement Analysis
Background Information
In the textbook, you read about how to prepare common-size financial statements, perform ratio analysis calculations, and use the financial statement information to make an informed decision. Keep in mind that the market is a reflection of the investors’ perception of the company and may provide a truer value of the business because the financial statements are based on principles such as the lower of cost or market, and matching revenues and expenses when they are earned and incurred. However, the financial statements provide a basis for making decisions and evaluating the results of management’s decisions.
The Financial Analysis Assignment is designed to encourage you to become familiar with the financial tools that are available, including a company’s annual report/10K, Yahoo! Finance, and other valuable resources. You will have an opportunity to do a fairly in-depth review of a company that you could potentially decide to invest in this week!
Instructions
1. In your textbook, Fundamentals of Corporate Finance, read:
a. Chapter 3, “Working with Financial Statements,” pages 53–78 (sections 3.2, 3.3, 3.4, and 3.5)
2. Download and review the PowerPoint file Chapter 3 – Working with Financial Statements.pptx to help you further understand the chapter.
3. In your textbook, Fundamentals of Corporate Finance, complete:
a. Problems 13 and 14 on page 85, preparing common-size balance sheets and common-base year balance sheets for Just Dew It. You should use an Excel spreadsheet (a template is available on the textbook website) to complete this assignment.
b. The requirements of the Mini-case “Ratio Analysis at S & S Air, Inc.” on pages 88 and 89
4. Write a one-page Word memo to the CEO of S & S Air, Inc. addressing Question 3 of the Mini-case, comparing the performance of S & S Air to the industry, commenting on why S & S’s ratios might be viewed as positive or negative relative to the industry, with brief commentary. (Exclude the second half of the question regarding the creation of another inventory ratio.)
5. When you have completed your assignment, save a copy for yourself and submit a copy to your instructor using the Dropbox.
6. This assignment is due by the end of the workshop.
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