2. You are to do a full Horizontal Analysis (on the Balance Sheet and on the Income...
Question:
2. You are to do a full Horizontal Analysis (on the Balance Sheet and on the Income Statement) for the years presented using the oldest year as your base year and rolling forward that base year to the most recent year. In other words, for the Balance Sheet which contains 2 years of data, you compare the oldest year to the most recent year. Easy. But for the Income Statement, there should be 3 years included in your Horizontal Analysis. I am looking for whole dollars here and throughout your report. NO PENNIES! You may also do percents for the Horizontal Analysis, but that is optional. You must state the whole dollar amount of the differences if you want credit. For the income statement, the oldest year gets compared to the middle year first. Then the middle year becomes the base year and that base year gets compared to the most recent year. Thus, the "rolling base year” concept.
3) You are to do a Vertical Analysis (on both the Balance Sheet and Income Statement) for EACH of the years presented. You must show your result as a % (not a decimal number) and round your % results to exactly 2 decimal places (ex: 2.07% ~ not 2% ~ not 2.0734566%).
For these analyses, you are to present the actual tables of your Vertical and Horizontal Analysis. If you only submit commentary on your results, you lose 20 points. Each of these analyses MUST SHOW statement titles, the name of every single individual account as shown on the original financial statement, the exact balances as shown on the original financial statements, and then the columns for your vertical/horizontal calculations.
NOTE: If your tables for #2 and #3 above spill over onto a second page, you must label the top of that subsequent page with headings of the statement AND headings on columns, just as would be in a published report. If these analyses are not user-friendly, you will not get full credit.
Contemporary Financial Management
ISBN: 978-1285198842
13th edition
Authors: R. Charles Moyer, James R. McGuigan, Ramesh P. Rao