Company’s liquidity, leverage and profitability

Assignment 2 requirements
For assignment 2 you need to review the ABC Company and complete the following tasks:
1. In the Assignment 2 dropbox area you will find three files: the ABC financial statements; the
Excel file “Spreadsheet ABC”; and the formula sheet.
2. Type your names and ID numbers in the “OBJ” tab of the “Spreadsheet – ABC” file. Identify
the type of statement and/or auditor’s opinion and add it in cell A5 of the “BS” worksheet/tab.
Possible choices: Internally Prepared, Compilation, Review, Audit – Unqualified, Audit –
Qualified, Audit – Adverse, Audit – Disclaimer.
3. Transfer the amounts from the ABC balance sheet to the “BS” tab of the Excel file. Maintain
the existing account categories in this file. Make sure that after you finish entering the data, the
accounting equation is valid i.e. Total Assets = Total Liabilities and Total Stockholders Equity.
4. Transfer the data from the ABC income statement to the “IS” tab of the Excel file. Again, you
should not change the existing categories in the file.
5. Then you need to create the common-size income statement (CSIS tab) and the common size
balance sheet (CSBS tab). This is known as vertical analysis and compares each amount with a
base amount selected from the same year. The common size balance sheet shows each account
on the balance sheet as a percentage of total assets for the same year. The common size income
statement shows each account in the income statement as a percentage of net sales in the same
6. The final step will be to complete the ratio worksheet – “FR” tab using the formula sheet that
you are given.
7. Finally, in a Word document summarize your findings regarding this company’s liquidity,
leverage and profitability. Which ratios indicate improvements in the associated categories, and
which show deteriorations?
Just a couple points of caution: first, you should not change the structure of the file i.e. alter the
existing formulas, accounts, etc. In addition, you only need to be concerned with the years for
which you are given data.
Although one submission is required per group, each member of the group should understand
thoroughly and be able to reproduce the entire worksheet on your own. You will need to submit
your completed Excel and Word files using the assignment dropbox by Sunday, February 23.
Please include the names of the contributing members in the “OBJ” tab of the Excel file. Let me
know if you have any questions.

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