Ratio Analysis and 10-K Review
Prepare an analysis of the assigned company (1500 – 2,000 words) in order to secure a loan for the company. The loan will increase the company’s total liabilities by 3%.The contents of the project include the following:
1.Discuss the loan amount and how you plan to use the loan proceeds.
2.Use the Excel Spreadsheet provided and complete the following.
a.Prepare a five year vertical analysis of the companys income statement.
b.Prepare a projected income statement for 2020 and 2021 assuming sales increase by 3% and 6%.
c.Compute the ratios listed with the income statement.
d.Compute the ratios listed with the balance sheet.
3.Using the results of your spreadsheet, what questions would you ask the CFO of the company?Explain.
The assigned company, spreadsheet, detailed instructions, and guidance are provided during week three.see the following and complete the attached excel sheet
Financial Analysis:
1. Open the Excel spreadsheet provided.Prepare a vertical analysis of Bridgfords income statement.Enter the percentages in columns C, E, G, I and K.For additional information regarding vertical analysis, please review the following.
Vertical Analysis
2.Prepare a projected income statement assuming sales increase by 3% in 2020 and 6% in 2021.
Average your vertical analysis percentages for each income statement account and enter the results in column L, rows 5 – 11.Example:Add columns C, E, G, I and K and divide by 5. (64.07+60.58+63.17+67.57+67.34)/5=64.55%.Column L, row 5 = 64.55%.
Enter your projected sales number in columns M & N, row 4.
Columns M and N:Multiply projected sales by the average percentage for each income statement account.
3.Ratio Computations.Use Excel formulas to calculate financial ratios listed with the income statement and balance sheet tabs.Calculate ratios for seven years (i.e. 2015-2021).Do not prepare ratios that require data from the 2020 and 2021 balance sheet.In this case, N/A is entered in the appropriate cell. For additional information regarding ratios, please review the following.
Financial Ratios
Note:If there is a discrepancy between the formula used in our text versus the formula included with the above link, use the formula incorporated with the above link.
4.Loan:The written section of the project includes a loan discussion and CFO questions and explanations.Use the following resources to complete your analysis.
Form 10-K
Corporate Annual and Earnings Report
5.Chief Financial Officer Questions:Using the results of your spreadsheet, what questions would you ask the CFO of Bridgford Foods?Explain.
Format your paper consistent with APA guidelines.Deliverables: Paper (MS Word) and Excel Spreadsheet. Review your Originality Report generated from SafeAssign.A new originality report is created with each attempt.Your last attempt is used for grading.
Income Statement
Consolidated Statements of Operations – USD ($) $ in Thousands
Oct. 30, 2015 % Oct. 28, 2016 % Nov. 03, 2017 % Nov. 02, 2018 % Nov. 01, 2019 % Average Percentage Nov. 02, 2020 Nov. 02, 2021
Net sales $ 130,448 $ 140,063 $ 167,223 $ 174,257 $ 188,785
Cost of products sold 83,579 84,850 105,637 117,751 127,121
Gross margin 46,869 55,213 61,586 56,506 61,664
Selling, general and administrative expenses 38,751 44,377 48,816 49,929 52,837
Gain (loss) on sale of property, plant and equipment 58 6,236 (290)
Income before taxes 8,118 10,836 12,828 12,813 8,537
Provision for (benefit on) income taxes (7,324) 3,066 3,999 6,296 2,053
Net income $ 15,442 $ 7,770 $ 8,829 $ 6,517 $ 6,484
Enter ratios in columns B, D, F, H, and J
Fixed Asset Turnover N/A N/A
Cash Flow per share N/A N/A
Earnings per share N/A N/A
Profit Margin Ratio
Gross Profit (margin) Ratio
Return on Assets N/A N/A
Return on Equity N/A N/A
Inventory Turnover N/A N/A
Days Sales in Inventory N/A N/A
Receivables Turnover N/A N/A
Days Sales in receivables N/A N/A
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Balance Sheet
Consolidated Balance Sheets – USD ($) $ in Thousands Oct. 30, 2015 Oct. 28, 2016 Nov. 03, 2017 Nov. 02, 2018 Nov. 01, 2019
Current assets:
Cash and cash equivalents $ 5,842 $ 6,985 $ 12,109 $ 8,179 $ 3,478
Accounts receivable, less allowance for doubtful accounts 14,619 16,582 19,148 20,293 21,875
Inventories, net 19,977 24,081 23,016 23,413 26,367
Prepaid expenses 319 937 1,550 1,331 1,048
Total current assets 40,757 48,585 55,823 53,216 52,768
Property, plant and equipment, net of accumulated depreciation and amortization 10,235 10,362 18,571 32,638 54,346
Other non-current assets 13,666 13,775 13,111 11,630 12,295
Deferred income taxes 10,644 14,532 10,040 4,010 4,047
Total assets 75,302 87,254 97,545 101,494 123,456
Current liabilities:
Accounts payable 6,087 4,085 5,365 7,655 7,993
Accrued payroll, advertising and other expenses 5,203 4,089 4,555 4,577 5,480
Income taxes payable 96 130 216 155 90
Current portion of non-current liabilities 2,825 3,918 6,108 5,980 6,377
Total current liabilities 14,211 12,222 16,244 18,367 19,940
Non-current liabilities 25,446 36,123 25,263 17,447 37,032
Total liabilities 39,657 48,345 41,507 35,814 56,972
Shareholders equity:
Preferred stock, without par value Authorized, – 1,000 shares; issued and outstanding none
Common stock, $1.00 par value Authorized, – 20,000 shares; issued and outstanding 9,138 9,134 9,134 9,134 9,134
Capital in excess of par value 8,334 8,298 8,298 8,298 8,298
Retained earnings 40,303 48,073 56,902 65,948 72,432
Accumulated other comprehensive loss (22,130) (26,596) (18,296) (17,700) (23,380)
Total shareholders equity 35,645 38,909 56,038 65,680 66,484
Total liabilities and shareholders equity $ 75,302 $ 87,254 $ 97,545 $ 101,494 $ 123,456
Enter ratios in columns B, D,F, H, and J
Net Working Capital
Current Ratio
Quick Ratio
Cash Ratio
Debt to Equity Ratio
Debt Ratio
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