Your Company #3 – Profitability, Liquidity, and Risk Analysi…

Your Company #3 Ratio Analysis

The most useful analytical tool for assessing profitability, liquidity, growth, and risk is financial statement ratios. Financial statement ratios express relations among various items from the three financial statements. Financial statement ratios are effective indicators of various dimensions of current profitability, liquidity, growth, and risk and serve as useful signals of future indicators of these performance measures.

Analyze the profitability, liquidity, growth, and risk for Your Company.

1. Use the same FSAP 9e spreadsheet you created for the Your Company (YC) #2 assignment.
2. Select File > Save As and rename your spreadsheet as ACG 5153 YC3 LastName FirstName.
3. Ensure that the data used in the analysis is correct before beginning this assignment. All the cells in lines 154 thru 156 (FINANCIAL DATA CHECKS) on the “Data” tab, and lines 14 thru 17 (DATA CHECKS) on the Analysis tab of the FSAP 9e spreadsheet file MUST show “0” as the calculated amounts.
4. Review the PROFITABILITY FACTORS and RISK FACTORS ratios in the Analysis tab in rows 23 76 and rows 77 125.
5. Add a new spreadsheet tab to the file. Name the tab “Independent Ratios” – Source Name.

1. 1. 1. Locate a reliable source of independently calculated profitability, liquidity, growth, and risk ratios for Your Company for comparison/validation of the ratio measures in the “Analysis” tab.1 Cite the source and download the ratios for the most recent FIVE years for Your Company into the spreadsheet.
      2. Prepare a table to compare the independently sourced ratios to your FASP 9e ratios on the Analysis tab in the FASP 9e spreadsheet file, rows 23 – 76 and rows 77 – 125. That is, check to see if your FSAP 9e ratios agree with the independently sourced ratios located for Your Company.
      3. Investigate and explain any differences between the FSAP 9e ratios on the Analysis tab and the ratios from your independent source. Explain and proof any differences in the formulas used in the two calculations. Correct errors in data input and/or balance classifications, if any, contributing to the differences between the ratios.

6. After completing 5.C. above, create another new spreadsheet tab titled Ratio Trends.

1. 1. 1. In this tab prepare a written analysis of the trends in the ratios on the Analysis tab in rows 23 76 and 77 125, over the five-year period.
      2. Your written analysis must include a discussion of the trends for each of the PROFITABILITY FACTORS and RISK FACTORS ratios in the Analysis tab over the five-year period.
      3. In your comments, provide a reason or reasons why these trends have occurred. Cite information in Your Company’s Annual Reports including management’s comments, the schedules and notes therein, and other reliable published information about the company and the industry it operates in to support your comments.

7. Save the data you entered in your spreadsheet file named as ACG 5153 YC3 LastName FirstName.

8. Review the Rubric for Assignment Your Company #3 to ensure that your completed assignment meets the grading criteria.

9. Submit your completed assignment in Canvas in the assignment by due date and time.

Important Grading Rubric

1. File Setup and Organization:A. New tabs created and Named Correctly: (Name of Independent Source) Ratios and Ratio Trends tabs are created and named correctly.

B. Data Input and Formatting:Data in new tabs (tabs for ratios from an independent source for the most recent five years AND trend analysis comments), are complete, accurate, well-organized and clearly formatted for readability, including proper alignment, consistent fonts, and column/row labeling.

2. Independent Source Ratio Tab:A. Data Comparison: Ratios form an independent source for the most recent five years are downloaded and compared accurately to the FSAP 9e ratios on the Analysis tab (rows 23 76 and 77 125).

B.Accuracy of Comparison:Discrepancies, if any, between ratios from an independent source and FSAP 9e ratios are identified and recorded systematically.

C. Explanations for Differences:Logical and well-researched explanations are provided for any differences identified during the comparison between ratios from an independent source and FSAP 9e ratios, with supporting evidence or reasoning.

3. Ratios Trends Tab:A. Analysis of Profitability Ratios: Trends for all profitability factors ratios in rows 23 76 of the Analysis tab are clearly identified and described over the five-year period. Written analysis includes thoughtful reasoning behind observed trends, supported by logical explanations such as changes in company operations, market conditions, or industry factors.

B. Analysis of Risk Ratios:Trends for all risk factors ratios in rows 77-125 of the Analysis tab are clearly identified and described over the five-year period. Written analysis includes logical and evidence-based reasoning for observed trends, supported by relevant business context.

C. Depth of Comments:Analysis demonstrates critical thinking and connects trends to the broader financial performance and strategic direction of the company.

4. Insightful Commentary:Comments and explanations reflect a deep understanding of financial ratios and their implications for the companys profitability, liquidity, and risk.