use a scaffolded learning approach. What that means is some of the assignments are designed to help you build sections of your final project as you go along. This way, you get feedback on the sections through these assignments and can address that feedback in your final project to make your final project stronger. This will also allow you to identify any issues or roadblocks early and ask for help as you need it instead of waiting till the end where you may run out of time.
For this assignment, write and submit the Income Statement Analysis section of the final project. Do not include any sections of the final project that you wrote for previous assignments. Only include the section asked for in this assignment.
Your assignment must follow all the formatting guidelines laid out in the final project (such as including APA-formatted title page, references, in-text citations, and have at least 2 pages of content.).
Go to http://finance.yahoo.com. Search for the company you wish to analyze. If you choose a publicly-traded company, their financials will be listed in Yahoo Finance and Hoover’s. If you choose a private company, you must obtain their financials directly from them and submit the financials as appendices to your final project.
On the bottom left-hand corner of the company’s page on Yahoo Finance is a section called “Financials”. There should be three links — Income Statement, Balance Sheet, and Cash Flow. If the company you picked does not have one of those or does not have three years’ worth of data for each of those, then pick another company.
You should have at least five sources These sources can be websites, newspaper or journal articles, or books. Don’t forget to cite the source of your financials (Yahoo Finance or otherwise). You may use any legitimate source (i.e.wikipedia, National Enquirer is not acceptable but NY Times is).
Introduction: In this section, introduce the company you have selected and include basic background information about the history, position in the industry, size and type of company, locations, and products.
Income Statement Analysis: In this section, answer the following for the trend analysis: What is the total revenue, total costs of revenue and net income for each year? How have these numbers changed over the three years and what could be some reasons why these numbers have changed the way they have? In addition, pick at least one appropriate (for this statement) ratio or financial in addition to what is provided and calculate that and explain it. See the section on ratio analysis below for ideas.
Beta: A measure of risk that is usually published and not calculated by you (A beta greater than 1 suggests that the company is more volatile/risky than the market)
Current ratio = Current Assets/Current Liabilities (A current ratio greater than 1 means the company has enough assets to cover all current liabilities should the need arise)
Quick ratio = (Current Assets – Inventory)/Current Liabilities (When you are dealing with a company that carries a lot of inventory, a quick ratio is a better indicator than a current ratio because it acknowledges that inventory is not typically liquid).
Total Asset Turnover = Net sales/Total Assets (Total asset turnover measures the dollar amount of sales generated with each dollar of total assets. Generally, the higher the total asset turnover, the more efficient management is using total assets.
Profit Margin = Net Income/Sales (Represents how much of each dollar in sales remains after all costs are covered)
Return on Equity = Net income/Total equity (Represents the return for all holders of equity in that company)
EBIT Return on Assets = EBIT/Total assets (Represents the pre-tax return on the total net investment in the firm from operations or alternatively, how efficiently management has used assets)
Debt-equity ratio = Total debt/Total equity (Represents the long term solvency or financial leverage in that company)
For more information on Scaffolded Learning Approach read this:https://en.wikipedia.org/wiki/Distributed_scaffolding