Mgmt 200 Spring 2011 Chapter 12

Mgmt 200 Spring 2011 Chapter 12 - 1 Financial Statement...

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Unformatted text preview: 1 Financial Statement Analysis Chapter 12 Chapter 12 (The Under Armour Story) Financial Statement Analysis • Purpose • Firms strategic decisions as reflected in the financial statements • Alternative accounting methods and estimates • Benchmarks • Industry variations • Common size financial statements Common-size Financial Statements • Income Statement – Set net sales to 100% and recast all the numbers for a given income statement as a percentage of net sales • Balance Sheet – Set total assets to 100% and recast all the numbers for a given balance sheet as a percentage of total assets • Statement of Cash Flows – Not applicable 2 Benchmarks • Trend analysis – Comparing numbers/ratios for a given firm through time – Horizontal analysis – Vertical analysis • Cross-sectional analysis – Comparing numbers/ratios across a set of firms at a given point in time • Forecast results (expectations) • Pre-set numbers (Rules of thumb) Exercise 12-4 The comparative balance sheets for Federer Sports Apparel are presented below. Federer Sports Apparel Balance Sheets December 31, 2013 2012 Assets Cash $2,300,000 $800,000 Accounts receivable 1,500,000 1,200,000 Inventory 2,800,000 1,700,000 Buildings 11,000,000 11,000,000 Accumulated depreciation (2,000,000) (1,000,000) Total Assets $15,600,000 $13,700,000 Accounts payable $1,450,000 $1,700,000 Litigation liability 1,500,000 Common stock 8,000,000 8,000,000 Retained Earnings 4,650,000 4,000,000 Total Liabilities and Equity $15,600,000 $13,700,000 Exercise 12-4 Required: 1. Prepare a vertical analysis of the balance sheet data for 2013 and 2012. Express each amount as a percentage of total assets....
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This note was uploaded on 02/27/2012 for the course MGMT 200 taught by Professor Greigg during the Spring '08 term at Purdue.

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Mgmt 200 Spring 2011 Chapter 12 - 1 Financial Statement...

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