Good morning, I need help with my homework. I'm trying to get a better GPA that's why I'm looking for help. The document is word has all the instructions, and the document in excel has all what it needed to be analyzed.I need this homework to be ready for tomorrow morning or noon.
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BUS 5601 Essentials of Business Development 1 Accounting Project: Part 3 – Ratio and Investment Analysis Instructions Due Date: September 12, 2021 by 11:59pm EST EXAMPLES – Horizontal and Vertical Analyses Horizontal Analysis Example (same method for all financial statements) 2020 Difference between ‘20 and ‘19 % Difference between ‘20 and ‘19 2019 Difference between ‘19 and ‘18 % Difference between ‘19 and ‘18 2018 Use oldest year as base year Difference between ‘20 and ‘18 % Difference between ‘20 and ‘18 Cash $20,000 $2,000 11.1% 2,000 / 18,000 $18,000 $3,000 20% 3,000 / 15,000 $15,000 $5,000 33.3% 5,000/15,000 Vertical Analysis Example: Balance sheet 2020 Percent of Total assets 2019 Percent of Total assets 2018 Percent of Total assets Assets Cash Etc. $20,000 --- 8% $18,000 5.6% $15,000 5.0% Total Assets Largest number on B.S. $250,000 100% $320,000 100% $300,000 100% Liabilities Acct. Payable Etc. St. Equity --- Ret. Earnings $40,000 -- --- 120,000 16% --- --- 48% $45,000 --- --- 110,000 14.1% 34.4% $50,000 --- --- 130,000 16.7% 43.3% Total Liab. & SE Largest number on B.S. is the 100% $250,000 100% $320,000 100% $300,000 100% Vertical Analysis Example: Income statement 2020 Percent of Sales 2019 Percent of Sales 2018 Percent of Sales Sales Revenue Largest number on income statement is the 100% $430,000 100% $400,000 100% $350,000 100% Expenses 422,000 98.1% 390,000 97.5% 330,000 94.3% Net Income $8,000 1.9% $10,000 2.5% $20,000 5.7% TASK #1: Requirements 1 through 4 can be done in Word or Excel. 1. Refer to pages 878 - 882 in your BUS 5601 text: Horizontal and Vertical Analysis. You can also refer to Canvas, Modules section “READINGS ACCOUNTING”, and open file “WEEK 3 - Accounting, Chapter 15.pdf”. Perform and submit a horizontal and vertical analysis on your company for the 3 most recent years. a. In your opinion, for the horizontal analysis, is the company’s financial position showing a better or worse trend from the oldest to the most recent period? Why? (Remember, when determining percentage changes, the “denominator” in the formula is the value for the oldest year.) b. What inefficiencies do you note in the vertical analysis? Does your opinion of the company’s financial position change from what you entered in 1a.? Why? 2. For the most recent year of your company, calculate (or locate the ratios in the Mergent Database, under the “Company Financials” tab) and list in a 2-column table (Column 1: Name of Ratio and Column 2: Value of Ratio) as many of the ratios as you can as shown on pg. 898 in the BUS 5601 text. You can find page 898 in Canvas, Modules section “READINGS ACCOUNTING”, file “WEEK 3 - Accounting, Chapter 15.pdf”. 3. Go to https://www.readyratios.com/sec/industry or copy and paste this web address in a browser’s address bar, and click on “Industry ratios”. Then, click on “All Industries”, and select the industry applicable for your company. Compare the ratios obtained from Requirement #2 above with the industry average ratios that are available. Note that you may not be able to identify some industry average ratios to compare against your company ratios, and vice versa. Present the ratios for your company and its industry in a table with the following four columns: Ratio Name, Your Company’s Ratio Value, the Industry Average Ratio Value, and Your Assessment and Interpretation of the Ratio. Note: For the ratio assessment and interpretation, you will need to refer to your text and/or notes regarding the nature, purpose, and objective of the ratio. 4. Compute the Altman Z-Score: The Z-Score can be characterized as a linear combination of 4-5 common business ratios. These ratios are weighted by coefficients which are estimated by spotting a set of firms which had declared a bankruptcy. Thereafter, a matched sample of firms is collected for the surviving firms, with matching by industry and estimated assets. The formula for Z-Score and prediction of bankruptcy was given by Edward I. Altman in 1968. This formula for Altman Z-Score is helpful in calculating and predicting the probability that a company will go into bankruptcy within two years. 5-factor model formula of the Altman Z-score: Z-score = 0.717T1 + 0.847T2 + 3.107T3 + 0.42T4 + 0.998T5 where, T1 = Working Capital / Total Assets T2 = Retained Earnings / Total Assets T3 = Earnings Before Interest and Taxes / Total Assets T4 = Equity / Total Liabilities T5 = Sales / Total Assets Zones of Discrimination: · 1.23 or less – “Distress” Zone · from 1.23 to 2.9 – “Grey” Zone · 2.9 or more – “Safe” Zone Interpretation of the Altman Z-Score (Zones of Discrimination) - The Z-Scores are helpful in predicting corporate defaults as well as an easy-to-calculate measure of control for financial distress status of companies in academic studies. A Z-Score of 2.9 and above is indication of a healthy company or one that is in the “safe” zone. A “safe” zone implies that such a company is not likely to enter bankruptcy. Companies with Z-Scores ranging between 1.23 - 2.9 lie in the “grey” area. Companies with a Z-Score or 1.23 or less lie in the “distress” zone and may face potential disruptions or even enter into bankruptcy. Accuracy and Effectiveness - In the initial stages, the Altman Z-Score was found to be 72% exact in predicting bankruptcy two years preceding the event, including a Type II error (false positives) of 6%. However, the model was found to be about 80% - 90% accurate in the process of predicting bankruptcy one year preceding the event, in a series of ensuing tests including three distinctive time periods over the next 31 years. However, a type II error, classifying the company as bankrupt while it is not going so, of 15% - 20% was also included in these tests. Required: Present the following information in a table with 8 columns: Column 1: T1 most current year Column 2: T2 most current year Column 3: T3 most current year Column 4: T4 most current year Column 5: T5 most current year Column 6: Z-score (calculated on the 5-factor model) for the most current year Column 7: Distress, Gray, Safe Column 8: Your opinion on the Altman Z-Score Interpretation (Column 7): Agree, Disagree, or Unsure? Why? TASK #2: Requirement 5 should be done in a Word document. 5. Investment Decision: In no more than two typed pages (double line spacing, 1” margins, and font Times New Roman, size 12), provide a statement of your decision to invest or not invest in your selected company’s stock based on your interpretation of the company’s long-term prospects (i.e., long-term viability and growth). Research this as you would if you were considering investing $50,000 your own cash in the stock of this company. You are expected to integrate your conclusions from the ratio analyses performed above; however, this is not to be your only source of information for the investment decision. You may use articles about you company found in publications or financial analyst reports to support your decision. Use the library academic databases (i.e., Proquest), the Internet, and Mergent Online news to search for information on your company and/or the industry. Provide a reference list for any sources cited in support of your statement. Please be sure to provide a clear conclusion on your decision to invest or not invest in this company’s stock. ***** Files/accounting-project-part-3-instructions-utfvgbvn.doc BUS 5601 Essentials of Business Development 1 Accounting Project: Part 3 – Ratio and Investment Analysis Instructions Due Date: September 12, 2021 by 11:59pm EST EXAMPLES – Horizontal and Vertical Analyses Horizontal Analysis Example (same method for all financial statements) 2020 Difference between ‘20 and ‘19 % Difference between ‘20 and ‘19 2019 Difference between ‘19 and ‘18 % Difference between ‘19 and ‘18 2018 Use oldest year as base year Difference between ‘20 and ‘18 % Difference between ‘20 and ‘18 Cash $20,000 $2,000 11.1% 2,000 / 18,000 $18,000 $3,000 20% 3,000 / 15,000 $15,000 $5,000 33.3% 5,000/15,000 Vertical Analysis Example: Balance sheet 2020 Percent of Total assets 2019 Percent of Total assets 2018 Percent of Total assets Assets Cash Etc. $20,000 --- 8% $18,000 5.6% $15,000 5.0% Total Assets Largest number on B.S. $250,000 100% $320,000 100% $300,000 100% Liabilities Acct. Payable Etc. St. Equity --- Ret. Earnings $40,000 -- --- 120,000 16% --- --- 48% $45,000 --- --- 110,000 14.1% 34.4% $50,000 --- --- 130,000 16.7% 43.3% Total Liab. & SE Largest number on B.S. is the 100% $250,000 100% $320,000 100% $300,000 100% Vertical Analysis Example: Income statement 2020 Percent of Sales 2019 Percent of Sales 2018 Percent of Sales Sales Revenue Largest number on income statement is the 100% $430,000 100% $400,000 100% $350,000 100% Expenses 422,000 98.1% 390,000 97.5% 330,000 94.3% Net Income $8,000 1.9% $10,000 2.5% $20,000 5.7% TASK #1: Requirements 1 through 4 can be done in Word or Excel. 1. Refer to pages 878 - 882 in your BUS 5601 text: Horizontal and Vertical Analysis. You can also refer to Canvas, Modules section “READINGS ACCOUNTING”, and open file “WEEK 3 - Accounting, Chapter 15.pdf”. Perform and submit a horizontal and vertical analysis on your company for the 3 most recent years. a. In your opinion, for the horizontal analysis, is the company’s financial position showing a better or worse trend from the oldest to the most recent period? Why? (Remember, when determining percentage changes, the “denominator” in the formula is the value for the oldest year.) b. What inefficiencies do you note in the vertical analysis? Does your opinion of the company’s financial position change from what you entered in 1a.? Why? 2. For the most recent year of your company, calculate (or locate the ratios in the Mergent Database, under the “Company Financials” tab) and list in a 2-column table (Column 1: Name of Ratio and Column 2: Value of Ratio) as many of the ratios as you can as shown on pg. 898 in the BUS 5601 text. You can find page 898 in Canvas, Modules section “READINGS ACCOUNTING”, file “WEEK 3 - Accounting, Chapter 15.pdf”. 3. Go to https://www.readyratios.com/sec/industry or copy and paste this web address in a browser’s address bar, and click on “Industry ratios”. Then, click on “All Industries”, and select the industry applicable for your company. Compare the ratios obtained from Requirement #2 above with the industry average ratios that are available