Financial Statement Analysis
A financial analysis is a written document that combines analytical narrative with the supporting financial metrics in order to communicate the results of the analyst’s examination of the financial information.
In the Resources area (see below) for this assignment, you will find links to the 10-K forms for General Motors Company and Ford Motor Company. You can glean a great deal of information about each company from its respective 10-K report.
You will also find the General Motors and Ford Motor Company Financial Statements Excel file, which contains the Balance Sheets, Income Statements, and Statements of Cash Flows for both companies. Each statement contains three years of financial information including the dollar figures and, in the balance sheet and income statement, common-sized percentages.
Use these documents to complete your assignment.
Prepare a financial analysis (a narrative that includes the supporting calculations) to compare and contrast the two companies with respect to the financial health of each company for 2019 and 2018 with respect to the following: Be sure that you not only provide ratio analysis, but summarize how these ratios are relevant to the health of each company!
Introduction and Backgrounds of Companies: [approximately 1 page].
Liquidity Ratios– [Select 4 of the following]: Working Capital, Current Ratio, Quick Ratio, Operating Cash Flow to Current Liabilities, Days Receivables Outstanding, Days Inventory Held, Accounts Payable Turnover, Days Accounts Payable Outstanding, Revenues to Cash, and Days Revenues in Cash. [approximately 1.5 pages]
Solvency Ratios – [Select 4 of the following]: Liabilities to Assets Ratio, Liabilities to Shareholders’ Equity Ratio, Long-Term Debt to Shareholders’ Equity Ratio, Interest Coverage Ratio, and Operating Cash Flow to Total Liabilities Ratio. [approximately 1.5 pages].
Profitability Ratios –[Select 4 of the following]: Return on Assets, Profit Margin Percentage, Total Asset Turnover, Return on Common Equity, Capital Structure Leverage, Gross Margin Percentage, Operating Margin Percentage, Accounts Receivable Turnover, Inventory Turnover, Fixed Asset Turnover, and other metrics that may be helpful [approximately 1.5 pages].
Horizontal and Vertical Common-Sized Percentages – Use common-sized percentages from the income statements to perform both vertical and horizontal analysis of the companies’ performance. [ approximately1.5 pages].
DuPont Analysis – Prepare a DuPont analysis for each company.
Conclusion – [approximately ½ page]
As you complete your assignment, be sure it meets the following guidelines.
Read the Financial Statement Analysis Scoring Guide for specific information about how your assignment will be evaluated.
◦ Written communication: Written communication is free of errors that detract from the overall message. Create appropriate headers to ensure that you have met all of the criteria for grading.
◦ APA formatting: All resources and citations should be formatted according to current APA style and formatting guidelines.
◦ Length: 5–10 pages. This does not include the Cover Sheet (required) and References. Be sure to include an Introduction AND Conclusion.