Spreadsheet Assignment $1$: Common Size Financial Statements

Instructions:

Select two publicly traded companies in the same industry $($companies which compete with one another$),$ and a third company in an entirely different industry. For example, you might choose Walmart and Target $($competitors$),$ and General Electric $($from a different industry$).$ Avoid banking, financial services, or automaker firms.

Part A:

Find the data from their most recent annual reports, and prepare an excel analysis that compares the income statements and balance sheets using the 'common size' approach.

Arrange the common$-$sized data for the different firms$/$years together so that it's easy to see the similarities and differences over time, and among the firms. The goal is a table of common$-$sized data for both of the financial statements for each of the three firms.

Part B:

Preparing a report is great, but, interpreting and explaining it makes it useful. Review your data and interpret what you see. Are the common$-$sized numbers similar among the firms? Why or why not? Make some educated guesses about why there are or aren't differences, i$.$e$.,$ explain the results of your analysis.

Part C:

DuPen analysis: Calculate each firm's ROE for the two most recent years along with the three constituent ratios $($Profit Margin, Total Asset Turnover, Equity Multiplier$).$ Further, select and calculate several $(4-7)$ other financial ratios that you feel are most relevant to your chosen companies.

Part D:

Calculating the ratios is a relatively straightforward exercise once you have the data in hand. However, determining what those ratios tell us about the business. Review your data and interpret what you see. Are the ratios similar between the firms? Why or why not? Make some educated guesses about why there are or aren't differences.