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20200128004831financial_statements_assessment_for_module_03.xlsx

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Date: Fri, 31 Jan 2020, 12:49
Subject: Re: Evaluating Performance and Benchmarking
To: cate cate <

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01/31/20, 12:48:45 PM
On Fri, 31 Jan 2020 at 12:47, Charles Sawanga wrote:

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On Thu, 30 Jan 2020 at 12:16, cate cate wrote:
Subject: Evaluating Performance and Benchmarking
Competency
Appraise the financial health and performance of a company.
Scenario
The Corporate Director of Acquisitions has approached you to assist with preparing financial data to help identify a potential new acquisition for your company. They have narrowed down the target to two companies and need your help in selecting the best one. You agree to help and think that the best approach would be to take the two companies and prepare a vertical and horizontal analysis of both the income statement and balance sheets for two years of data.
Instructions
You discuss your plan with the director, and you both decide that you should create an Excel file containing four tabs, labeling the four tabs as follows:
Tab1: “Income statement vertical analysis”
Tab 2: “Income statement horizontal”
Tab 3: “Balance sheet vertical analysis”
Tab 4: “Balance sheet horizontal analysis”In addition, you both decide it best to also create a Word document with your assessment of each company’s performance and support which company is the better acquisition target.

Attachments area

Income Stat Vertical

nalysis

COMPANY

Income Statement All numbers in thousands

% (A/1

) %(B/

Revenue 2

18 2017 Total Revenue 14,134,732

0.00% 12,866,757 100.00% Cost of Revenue

,510,238

67.28% 8,668,505 67.37% Gross Profit 4,624,494 32.72% 4,198,252 32.63% Operating Expenses Selling General and Administrative 2,576,098 18.23% 2,395,608 18.62% Total Operating Expenses 12,086,336 85.51%

,064,113

85.99% Operating Income or Loss 2,048,396 14.49% 1,802,644 14.01% Income from Continuing Operations Total Other Income/Expenses Net –

7,676 –

0.05% -16,488 –

0.13% Earnings Before Interest and Taxes

2,048,396 14.49% 1,802,644 14.01%
Interest Expense -18,847

-0.13%

-19,569 -0.15% Income Before Tax 2,040,720 14.44% 1,786,156 13.88% Income Tax Expense 677,967 4.80% 668,502 5.20% Net Income 1,362,753 9.64% 1,117,654 8.69% COMPANY 2 Income Statement
All numbers in thousands

%(A/

38,972,934

) % (B/35864664) Revenue

2018

2017
Total Revenue 38,972,934 100.00%

35,864,664

100.00%
Cost of Revenue

27,831,177 71.41% 25,502,167 71.11% Gross Profit

11,141,757 28.59% 10,362,497 28.89% Operating Expenses 0.00%
Selling General and Administrative

6,923,564 1

7.77% 6,375,071 17.78% Total Operating Expenses

34,754,741 89.18% 31,877,238 88.88% Operating Income or Loss

4,218,193 10.82% 3,987,426 11.12% Income from Continuing Operations 0.00%
Total Other Income/Expenses Net

-44,982 -0.12% -130,838 -0.36% Earnings Before Interest and Taxes 4,218,193 10.82% 3,987,426 11.12%
Interest Expense

-8,860 –

0.02% -64,295 -0.18% Income Before Tax

4,173,211 1

0.71% 3,856,588 10.75% Income Tax Expense

1,113,413 2.86% 1,248,640 3.48% Net Income

3,059,798 7.85% 2,607,948 7.27%

Income St. Horizontal

COMPANY 1

Income Statement

All numbers in thousands

Change %Change Revenue 2018 2017

(2018-2017) Change/2017 Total Revenue 14,134,732 12,866,757

1,267,975 9.85% Cost of Revenue

9,510,238

8,668,505

841,733 9.71% Gross Profit 4,624,494 4,198,252

426,242 10.15% Operating Expenses
Selling General and Administrative 2,576,098 2,395,608

180,490 7.53% Total Operating Expenses 12,086,336

11,064,113 1,022,223 9.24% Operating Income or Loss 2,048,396 1,802,644

245,752 13.63% Income from Continuing Operations
Total Other Income/Expenses Net -7,676 -16,488

8,812 -53.44% Earnings Before Interest and Taxes 2,048,396 1,802,644 245,752 13.63%
Interest Expense -18,847 -19,569

722 -3.69% Income Before Tax 2,040,720 1,786,156

254,564 14.25% Income Tax Expense 677,967 668,502

9,465 1.42% Net Income 1,362,753 1,117,654

245,099 21.93%

COMPANY 2
Income Statement

All numbers in thousands Change

% Change

Revenue 2018 2017 (2018-2017) Change/2017

Total Revenue 38,972,934 35,864,664

3,108,270 8.67% Cost of Revenue 27,831,177 25,502,167

2,329,010 9.13% Gross Profit 11,141,757 10,362,497

779,260 7.52%

Operating Expenses

Selling General and Administrative 6,923,564 6,375,071

548,493 8.60% Total Operating Expenses 34,754,741 31,877,238

2,877,503 9.03% Operating Income or Loss 4,218,193 3,987,426

230,767 5.79%

Income from Continuing Operations

Total Other Income/Expenses Net -44,982 -130,838

85,856 -65.62% Earnings Before Interest and Taxes 4,218,193 3,987,426 230,767 5.79%
Interest Expense -8,860 -64,295

55,435 -86.22% Income Before Tax 4,173,211 3,856,588

316,623 8.21% Income Tax Expense 1,113,413 1,248,640

-135,227 -10.83% Net Income 3,059,798 2,607,948

451,850 17.33%

Balance- Vertical Analysis

COMPANY 1
All numbers in thousands

2018

2017

–

1.42%

0.01%

0.02%

– –

100.00%

–

Long Term Debt

7.77%

– –

0.07%

3,049,308 53.29% 2,748,017 51.76%

COMPANY 2
Balance Sheet

All numbers in thousands

Period Ending 2018 2017

Current Assets

Cash And Cash Equivalents

Short Term Investments –

Net Receivables

Inventory

Other Current Assets –

Total Current Assets

Long Term Investments – –
Property Plant and Equipment

0.71%

–

Other Assets

Deferred Long Term Asset Charges –

0.05%

Total Assets

100.00%

Current Liabilities

Accounts Payable

– –

Other Current Liabilities –

Total Current Liabilities

Long Term Debt

Other Liabilities

Total Liabilities

Stockholders’ Equity
Preferred Stock – –

Common Stock

Retained Earnings –

Treasury Stock –

Capital Surplus – –

–

-3.14%

Total Stockholder Equity 5,048,600 35.24%

Net Tangible Assets

			Balance Sheet
			Period Ending	%(A/5722051)	%(B/5309351)
			Current Assets
			Cash And Cash Equivalents		1,290,294	22.55%		1,111,599	20.94%
			Short Term Investments			512		0.01%
			Net Receivables		87,868	1.54%		75,154
			Inventory		1,641,735	28.69%		1,512,886	28.49%
			Other Current Assets		11,847	0.21%		13,642	0.26%
			Total Current Assets		3,151,157	55.07%		2,813,049	52.98%
			Long Term Investments		712		1,288
			Property Plant and Equipment		2,382,464	41.64%		2,328,048	43.85%
			Other Assets		187,718	3.28%		166,966	3.14%
			Deferred Long Term Asset Charges
			Total Assets		5,722,051		5,309,351
			Current Liabilities
			Accounts Payable		1,059,844	1	8.52%		1,021,735	19.24%
Short/Current				Long Term Debt			84,973	1.49%
			Other Current Liabilities		9,902	0.17%		24,559	0.46%
			Total Current Liabilities		1,926,402	33.67%		1,752,506	33.01%
	311,994	5.45%		396,493	7.47%
			Other Liabilities		434,347	7.59%		412,335
			Total Liabilities		2,672,743	46.71%		2,561,334	48.24%
			Stockholders’ Equity
			Preferred Stock
			Common Stock		3,796		0.07%		3,919
			Retained Earnings		2,071,400	36.20%		1,801,138	33.92%
			Treasury Stock		-318,252	-5.56%		-272,755	-5.14%
			Capital Surplus		1,292,391	22.59%		1,215,806	22.90%
			Total Stockholder Equity				3,049,308		53.29%		2,748,017	51.76%
			Net Tangible Assets
%(A/14326000)	%(B/14058015)
	3,030,200	21.15%		2,758,477	19.62%
	506,165	3.60%
	860,000	6.00%		327,166	2.33%
	4,579,000	31.96%		4,187,243	29.79%
	12,217	0.09%
	8,469,200	59.12%		8,485,727	60.36%
	5,255,200	36.68%		5,006,053	35.61%
	Goodwill		97,600	0.68%		100,069
	Intangible Assets		144,900	1.03%
	504,000	3.52%		321,266	2.29%
	6,558
	14,326,000		14,058,015
	2,644,100	18.46%		2,488,373	17.70%
		Short/Current Long Term Debt
	1,429,136	10.17%
	5,531,300	38.61%		5,125,537	36.46%
	2,233,600	15.59%		2,230,607	15.87%
	1,512,500	10.56%		1,331,645	9.47%
	9,277,400	64.76%		8,909,706	63.38%
			5,048,600		35.24%		628,009	4.47%
	4,962,159	35.30%
		–		441,859			-3.14%
	Other Stockholder Equity	-441,859
	5,148,309	36.62%
	4,951,000	34.56%		4,903,340	34.88%

Balance – Horizontal Analysis

Balance Sheet

All numbers in thousands

%Change

Period Ending 2018 2017 (2018-2017)

Current Assets

Cash And Cash Equivalents 1,290,294 1,111,599

Short Term Investments 512 0 512
Net Receivables 87,868 75,154

Inventory 1,641,735 1,512,886

8.52%

Other Current Assets 11,847 13,642

Total Current Assets 3,151,157 2,813,049

Long Term Investments 712 1,288

Property Plant and Equipment 2,382,464 2,328,048

Other Assets 187,718 166,966

Deferred Long Term Asset Charges – –
Total Assets 5,722,051 5,309,351

7.77%

Current Liabilities

Accounts Payable 1,059,844 1,021,735

Short/Current Long Term Debt 84,973 0 84,973
Other Current Liabilities 9,902 24,559

Total Current Liabilities 1,926,402 1,752,506

Long Term Debt 311,994 396,493

Other Liabilities 434,347 412,335

Total Liabilities 2,672,743 2,561,334

Stockholders’ Equity

Preferred Stock – –
Common Stock 3,796 3,919

-3.14%

Retained Earnings 2,071,400 1,801,138

Treasury Stock -318,252 -272,755

Capital Surplus 1,292,391 1,215,806

Total Stockholder Equity 3,049,308 2,748,017

Net Tangible Assets 3,049,308 2,748,017 301,291 10.96%

Balance Sheet
All numbers in thousands

Period Ending 2018 2017

Current Assets

Cash And Cash Equivalents 3,030,200 2,758,477

9.85%

Short Term Investments 0 506,165

Net Receivables 860,000 327,166

Inventory 4,579,000 4,187,243

Other Current Assets 0 12,217

-100.00%

Total Current Assets 8,469,200 8,485,727

Long Term Investments – –
Property Plant and Equipment 5,255,200 5,006,053

Goodwill 97,600 100,069

Intangible Assets 0 144,900

-100.00%

Other Assets 504,000 321,266

Deferred Long Term Asset Charges 0 6,558

-100.00%

Total Assets 14,326,000 14,058,015

Current Liabilities

Accounts Payable 2,644,100 2,488,373

Short/Current Long Term Debt – –
Other Current Liabilities 0 1,429,136

-100.00%

Total Current Liabilities 5,531,300 5,125,537

Long Term Debt 2,233,600 2,230,607

0.13%

Other Liabilities 1,512,500 1,331,645

Total Liabilities 9,277,400 8,909,706

Stockholders’ Equity
Preferred Stock – –

Common Stock 5,048,600 628,009

Retained Earnings 0 4,962,159

-100.00%

Treasury Stock 0 -441,859 441,859 -100.00%
Capital Surplus – –
Other Stockholder Equity 0 -441,859 441,859 -100.00%
Total Stockholder Equity 5,048,600 5,148,309

Net Tangible Assets 4,951,000 4,903,340

COMPANY ONE
CHANGE
change/2017
178,695	16.08%
12,714	16.92%
128,849
-1,795	-13.16%
338,108	12.02%
-576	-44.72%
54,416	2.34%
20,752	12.43%
412,700
38,109	3.73%
-14,657	-59.68%
173,896	9.92%
-84,499	-21.31%
22,012	5.34%
111,409	4.35%
-123
270,262	15.01%
-45,497	16.68%
76,585	6.30%
	301,291	10.96%
COMPANY TWO
271,723
-506,165			-100.00%
532,834	162.86%
391,757	9.36%
-12,217
-16,527	-0.19%
249,147	4.98%
-2,469	-2.47%
-144,900
182,734	56.88%
-6,558
267,985	1.91%
155,727	6.26%
-1,429,136
405,763	7.92%
2,993
180,855	13.58%
367,694	4.13%
4,420,591	703.91%
-4,962,159
-99,709	-1.94%
47,660	0.97%

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A
COMPANY 1
Income Statement
All numbers in thousands
Revenue
Total Revenue
Cost of Revenue
Gross Profit
Operating Expenses
Selling General and Administrative
Total Operating Expenses
Operating Income or Loss
Income from Continuing Operations

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