Assignment:
Financial Statement Geography and Ra?os
Instruc?ons:
WHAT: Use the PDFs and spreadsheet below to answer the questions. You will need to use the "Quick Guide" often as a reference so I would recommend printing it.
WHY: Accounting information is critical for making business decisions. Without an understanding of where this information is located (i.e. "geography") and how to analyze this information (i.e. ratios, common sizing, etc.) it is very difficult to be an effective decision maker. This assignment is designed to give you a basic understanding of where the information is, how to analyze it, and how to use it in decisions.
Question :1 Use the attached PDF "Ratio Grid" - name the company and the ratio used to answer the question
Which company(ies) are financing the majority of their assets with debt?
Question 2 Use the attached PDF "Ratio Grid" - name the company and the ratio used to answer the question
Which company appears to be the most overvalued?
Question 3 Use the data from the GoPro Income Statement and Balance Sheet file to answer the question. Round to the
hundredths place. What was GoPro's receivables turnoverratio in 2015? What was it for 2012? In which year were they turning
receivables into cash more quickly?
Question 4 Use the data from the GoPro Income Statement and Balance Sheet file to answer the question. Round to the
hundredths place (i.e. 2.86):
What was GoPro's currentratio as of 12/31/2015? What was it as of 12/31/2012? When were they more liquid?
Question5
(A) What was GoPro's Market Cap on 12/31/2015 based on 140,570,000 shares outstanding and a share price of $9.15?
(B) What was GoPro's Earnings Per Share for 2015 based on 140,570,000 shares outstanding (format as currency e.g.
$1.59)?
(C) Based on the calculations in A and B what is GoPro's P/E Ratio? D) Is this P/E ratio high or low relative to
the average for Fortune 500 companies?
Question 6 Use the data from the GoPro Income Statement and Balance Sheet file to answer the question. Format as a % rounded
to the tenths (i.e. 12.3%).
What was GoPro's gross margin in 2015? What was it in 2012? In which year were they more efficient at producing
their product?
Question 7 Use the data from the GoPro Income Statement and Balance Sheet file to answer the question.
How much did they pay in taxes in 2013?
Question 8 How much did revenue increase/decrease from 2012 to 2015 in dollars? B) What percentage increase/decrease is that?
Question 9 If you were a vendor/supplier extending credit to a potential client for 30 days, which type of ratio would be most important to look at?
Activity
Profitability
Liquidity
Leverage
Question 10 If you were analyzing a company through income statement common sizing, what would this analysis let you do (check all those that apply)?
Determine what trends are increasing or decreasing profits.
Make comparisons to the past and peers
Determine a company's cash position.
Determine the company's liquidity
Question 11 In the common sized income statement found below you will note XYZ Company's revenue increased from 2015 to 2016,
but net profits decreased. Based on what you see, what was the primary cause?
Common Sized Income Statement XYZ Company
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2016
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2015
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TOTAL REVENUE:
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$17,890
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100.00%
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$16,489
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100.00%
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Cost of Goods Sold (COGs)
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$9,034
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50.50%
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$7,299
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44.27%
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GROSS PROFIT
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$8,856
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49.50%
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$9,190
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55.73%
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Sales, General, & Administration (SG&A)
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$5,071
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28.35%
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$4,478
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27.16%
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OPERATING INCOME
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$3,785
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21.15%
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$4,712
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28.58%
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Interest and Investment Income
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($67)
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-0.37%
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($37)
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-0.22%
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Currency Exchange Gains (Loss)
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$0
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0.00%
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$0
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0.00%
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Other Non-Operating Income (Expenses)
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$28
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0.16%
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$0
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0.00%
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Unusual Items
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($29)
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-0.16%
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$0
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0.00%
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EBT (Earnings Before Taxes):
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$3,853
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r
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21.53%
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$4,749
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28.80%
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Income Tax Expense
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$1,348
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7.54%
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$1,662
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10.08%
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NET INCOME
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$2,504
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14.00%
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$3,087
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18.72%
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Question 12 Where does one see evidence of this in the financial statements
(check all those that apply)?
The increase in revenue between 2013 and 2014.
The increase in cash and short term investments between 2013 and 2014
The increase in total equity between 2013 and 2014
The increase in liabilities between 2013 and 2014.
Question 13 Which financial statement would be used to answer the following questions
How much did a company do in sales last year?
How much debt does a company have?
How much money did a company "make" last year?
How much cash operations is generating?
How much a company owes its vendors?
Question 14
Look at the balance sheets for ABC, Inc. and XYZ, Inc below. Which company has a "stronger" balance sheet and why is it
stronger (points are based on your explanation for why it is stronger).
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ABC, Inc. Balance Sheet
As of 2016-12-31
Assets
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XYZ, Inc. Balance Sheet
As of 2016-12-31
Assets
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Cash and Short Ten Investments
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$190.00
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Cash and Short Term Investments
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$17.50
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Accounts Receivable - Trade, Net
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$263.75
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Accounts Receivable - Trade, Net
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$163.75
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Total Inventory
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$348.15
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Total Inventory
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$131.00
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Other Current Assets, Total
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$105.50
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Other Current Assets, Total
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$65.50
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Total Current Assets
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$907.40
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Total Current Assets
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$377.75
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Property/Plant/Equipment, Total - Gross
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$316.50
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Property/Plant/Equipment, Total - Gross
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$138.00
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Accumulated Depreciation, Total
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-$126.60
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Accumulated Depreciation, Total
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-$55.20
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Long Term Investments
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Long Term Investments
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Other Long Term Assets, Total
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$36.06
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Other Long Term Assets, Total
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$12.00
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Total Assets
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$1,133.36
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Total Assets
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$472.55
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Liabilities and Stockholder Equity
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Liabilities and Stockholder Equity
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Accounts Payable
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$211.00
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Accounts Payable
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$198.17
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Current Port. of LT Debt/Capital Leases
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$22.20
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Current Port. of LT Debt/Capital Leases
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$32.89
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Other Current liabilities, Total
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$4.33
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Other Current liabilities, Total
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$27.68
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Total Current Liabilities
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$237.53
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Total Current Liabilities
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$258.74
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Long Term Debt
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$118.00
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Long Term Debt
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$190.00
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Other Liabilities, Total
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$9.44
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Other Liabilities, Total
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$2.33
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Total Liabilities
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$364.97
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Total Liabilities
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$451.07
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Preferred Stock . Non Redeemable, Net
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$0.00
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Preferred Stock - Non Redeemable, Net
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$0.00
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Additional Paid-In Capital
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$14.51
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Additional Paid-In Capital
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$2.45
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Common Stock, Total
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$533.00
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Common Stock, Total
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$188.00
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Retained Earnings (Accumulated Deficit)
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$220.88
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Retained Earnings (Accumulated Deficit)
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-$168.97
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Total Equity
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$768.39
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Total Equity
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$21.48
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Total Liabilities & Shareholders' Equity
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$1,133.36
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Total Liabilities & Shareholders' Equity
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$472.55
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