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# In-Class Assignment

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### In-Class Assignment

1. 1. Chapter 18 Financial Statement Analysis In Class Assignment Week 1 Three tools commonly used to analyze companies are: 1. _______________________________________________________ 2. _______________________________________________________ 3. _______________________________________________________ Horizontal analysis is _________________________________________ _________________________________________________________ a.k.a. ____________________________________ Formula (use illustration 18-3) __________________________________ _________________________________________________________ _________________________________________________________ In horizontal analysis, 100% will always be found in ___________________ on the balance sheet. In horizontal analysis, 100% will always be found in ___________________ on the income statement.
2. 2. Vertical analysis is ___________________________________________ _________________________________________________________ _________________________________________________________ a.k.a. ____________________________________ In vertical analysis, on the balance sheet, 100% will be found in _________ ___________. In vertical analysis, on the income statement, 100% will be found in _______ _____________________. Define: Earning Power ______________________________________________ _________________________________________________________ _________________________________________________________ Discontinued Operations ______________________________________ _________________________________________________________ _________________________________________________________ Proforma Income ____________________________________________ _________________________________________________________ _________________________________________________________
3. 3. Extraordinary Items _________________________________________ _________________________________________________________ _________________________________________________________ Changes in Accounting Principles ________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ Three examples of extraordinary items are: 1. _______________________________________________________ 2. _______________________________________________________ 3. _______________________________________________________
4. 4. 1. For Pepsi and Coca Cola, do horizontal analysis on the following income statement items: PEPSI 2005 2004 2003 Net Revenues Cost of Sales Gross Profit Operating Profit Net Income Coca Cola 2005 2004 2003 Net Revenues COGS Gross Profit Operating Income Net Income 2. For Pepsi and Coca Cola, do horizontal analysis on the following balance sheet items: PEPSI 12/31/05 12/25/04 Total Current Assets Total Assets Total Current Liabilities Total Liabilities Shareholder’s Equity (include P/S) Coca Cola 12/31/05 12/31/04 Total Current Assets Total Assets Total Current Liabilities Total Liabilities Shareholder’s Equity
5. 5. 3. For Pepsi and Coca Cola, do vertical analysis on the following income statement items: PEPSI 2005 2004 2003 Net Revenues Cost of Sales Gross Profit Operating Profit Net Income Coca Cola 2005 2004 2003 Net Revenues COGS Gross Profit Operating Income Net Income 4. For Pepsi and Coca Cola, do vertical analysis on the following balance sheet items: PEPSI 12/31/05 12/25/04 Total Current Assets Total Assets Total Current Liabilities Total Liabilities Shareholder’s Equity (include P/S) Coca Cola 12/31/05 12/31/04 Total Current Assets Total Assets Total Current Liabilities Total Liabilities Shareholder’s Equity
6. 6. Chapter 18 Financial Statement Analysis In Class Assignment Week 2 Define: Ratio analysis ______________________________________________ _________________________________________________________ Ratio _____________________________________________________ _________________________________________________________ Three alternate ways of expressing relationships are: 1. _______________________________________________________ 2. _______________________________________________________ 3. _______________________________________________________ Intracompany comparisons compare ______________________________ _________________________________________________________ Intercompany comparisons compare ______________________________ _________________________________________________________
7. 7. Liquidity ratios measure ______________________________________ _________________________________________________________ _________________________________________________________ _________________________________________________________ Profitability ratios measure ____________________________________ _________________________________________________________ _________________________________________________________ Solvency ratios measure ______________________________________ _________________________________________________________ Four examples of liquidity ratios are: 1. __________________________________________ 2. __________________________________________ 3. __________________________________________ 4. __________________________________________
8. 8. Seven examples of profitability ratios are: 1. __________________________________________ 2. __________________________________________ 3. __________________________________________ 4. __________________________________________ 5. __________________________________________ 6. __________________________________________ 7. __________________________________________ Two examples of solvency ratios are: 1. __________________________________________ 2. __________________________________________
9. 9. 1. Fill in the following table for Pepsi and Coca Cola: Cash ST Receivables, Current Liabilities Acid Test Investments net Ratio Pepsi 12/31/05 Pepsi 12/25/04 Coca Cola 12/31/05 Coca Cola 12/31/04 Which company is doing better? 2. Fill in the following table for Pepsi and Coca Cola: Net Income Sales Profit Margin Pepsi 2005 Pepsi 2004 Pepsi 2003 Coca Cola 2005 Coca Cola 2004 Coca Cola 2003 Which company is doing better? 3. Fill in the following table for Pepsi and Coca Cola: Market Price Earnings Per Share PE Ratio (You need to look this up on the Internet for the date the statements closed) Pepsi 2005 Pepsi 2004 Pepsi 2003 Coca Cola 2005 Coca Cola 2004
10. 10. Coca Cola 2003 4. Fill in the following table for Pepsi and Coca Cola: Cash Dividends Net Income Payout Ratio Pepsi 2005 Pepsi 2004 Pepsi 2003 Coca Cola 2005 Coca Cola 2004 Coca Cola 2003