This Portfolio Project has two parts:
calculations and a 4- to 6-page essay. While the calculation
requirements of this assignment are important, equally important are
your discussion and analysis of the quantitative results. You will
submit two documents: 1) a spreadsheet containing your horizontal and
vertical analysis (and perhaps your ratios) and 2) a word document
containing your essay.
Choose a publicly traded company and
perform an expanded analysis on the financial statements.Please use the
most current 10K statements available on www.sec.gov http://www.sec.govor annual statements in finance.yahoo.com http://finance.yahoo.com.You will submit both parts separately.

Part 1: Please complete the following for your chosen firm in an Excel spreadsheet:

1. Horizontal
   and vertical analysis of the Income Statements for the past three years
   (all yearly balances set as a percentage of total revenues for that
   year).
2. Horizontal and vertical analysis of the Balance Sheets
   for the past three years (all yearly balances set as a percentage of
   total assets for that year).
3. Ratio analysis (eight ratios of
   your choosing) for the past three years PLUS a measurement for the
   creditworthiness of your firm as measured by Altman’s Z-score. Note
   that if you used your chosen firm for our ratio-related discussion
   posts, then you MUST also present industry-average ratios or current
   year competitor ratios for your ratio analysis. Comparing your firm’s
   ratios to a close competitor or an industry-average ratio makes your
   analysis much more meaningful.

Part 2: The Paper:

• 4-6 pages in length.
• Include a proper introduction and conclusion.
• Include a reference page.
• Your
  paper should provide your reader with an overall understanding of the
  financial health of your chosen firm including the following:
• • Discussion of the ratio analysis results, including rationale for the ratios chosen.
  • Discussion of all horizontal and vertical analysis from above.
  • Discussion of four items from the management discussion of the firm that support the conclusion formed in your discussion of the financial results.

Much
of this course has concentrated on learning the financial statements,
primarily because there was not an accounting prerequisite. Because of
this concentration, you may find this assignment challenging. However,
if you understand the financial statements, then the horizontal and
vertical analysis should (hopefully) be rather intuitive. For example,
if you see sales rise by 20%, then shouldn’t you also see net income
rise by 20% or more if the managers are effective at controlling costs?
If you see sales rise by 20% and assets rise by 40%, we have to ask why
this is happening. It would appear that assets have risen too far given
the sales that are generated from those assets—why did this occur? You
may have to research that type of question and discuss it in your
analysis.

The link below demonstrates the completion of vertical
and horizontal analysis on Nike using Excel. Dr. Jill Bale, the course
writer, demonstrates the use of Excel equations and discusses some of
the issues you may face when working on the spreadsheet for your
portfolio project. If you would like some additional guidance on the
spreadsheet requirement of the portfolio project, please watch the
video. Note that the video does not discuss adding the 8 required
ratios to your spreadsheet; however, you are required to submit your
company ratios on this spreadsheet as well as the vertical/horizontal
analysis. As always, your instructor is available for follow-up
questions.

Bale, J. (2013, August 19). Demonstration of Vertical/Horizontal Analysis using Excel [Video file]. Retrieved from http://camrelay1.unl.edu/inbox/jbale2/Nike_Horizontal_and_Vertical_analysis_-_MP4_with_Smart_Player_(Large)_-_20130819_10.10.04AM.html

You’ve
had some experience with financial ratios through Discussion Board.
I’d suggest that you start your ratio analysis with the four ratios
found in the DuPont equation. If you discover a weakness in one
component of the DuPont ratios, then it would make sense to look at
ratios that are closely related to the troublesome ratio. For example,
if you discover that the asset turnover is declining over time, then
take a look at some related ratios such as the inventory turnover rate
or the average collection period. If you discover that the equity
multiplier is increasing (indicating greater reliance on debt), then
look at some related ratios such as the debt ratio or Times Interest
Earned. These ratios are discussed in our textbook, even though you may
not have been assigned to thoroughly read the chapters.

Finally,
please read through the rubric that will be used to grade your
assignment—you will get a feeling of expectations by doing so. Your
instructor is here to help you through this project. If you have
questions, please let your instructor know. He or she may be willing to
take a quick look at your horizontal and vertical analysis to give you
feedback in advance since you will not have had much experience on that
calculation prior to the project. Always communicate right away with
your instructor when you need assistance!