Pro$-$TIP: This week may seem like a lot of work. If you use Excel or another spreadsheet program, it will greatly reduce the amount of work and time.

Investigate the balance sheet for changes in the size and financial position of the company $(3$ years of financial statement data$).$ To calculate changes, subtract the prior year balance from the current year balance. For example, the change in fixed assets between $2020$ and $2021=2021$ Fixed assets $2020$ fixed assets.

Cash analysis: Sources$/$Uses of cash

Comment on how the company sources cash $($increase in a liability$/$decrease in an asset$)$

Comment on how the company uses cash $($increase in an asset$/$decrease in a liability$)$

Comment on any trends or changes you notice, for example, increases$/$decreases in fixed assets, cash, debt, etc. Identify those areas you consider of importance to the company and its stakeholders.

Common size analysis $(3$ years of financial statement data$)$:

Divide the income statement items by sales

Divide the balance sheet items by sales

Examples:

Current assets$/$sales

Inventory$/$sales

Accounts receivable$/$ sales

Current liabilities$/$sales

Accounts payable$/$sales

Accrued expenses$/$sales

Fixed assets$/$sales

Total Assets$/$Sales

Comment on any trends or changes you discover.

NOTE: The ratios in bold will be used in one of the options for Milestone $07$