This Is Part 3 Of The Projectexcel Project Projecting Financ

This Is Part 3 Of The Projectexcel Project Projecting Financial Sta

Continue in the same Excel workbook prepared in Module 4: Week 4, adding the following tabs:

- The 12th tab labeled "Common Sized Balance Sheets" with formulas calculating common sized percentages based on Total Assets, for all three historical years.

- The 13th tab labeled "Common Sized Income Statements" with formulas calculating common sized percentages based on Revenue or Total Revenue, for all three historical years.

- The 14th tab labeled "Horizontal Analysis of Balance Sheets" with copied previous balance sheets and added dollar and percentage change columns between years.

- The 15th tab labeled "Horizontal Analysis of Income Statements" with copied previous income statements and added dollar and percentage change columns between years.

- The 16th tab labeled "Projected Income Statements" with three years of projections starting from the most recent year after the last company report.

- The 17th tab labeled "Projected Balance Sheets" with three years of projections starting from the most recent year after the last report.

- The 18th tab labeled "Projected Statement of Cash Flows" with three years of projections, ensuring consistency and accuracy, using research-based assumptions and citing sources.

Projections should be based on research including historical data, ratios, economic trends, and MD&A insights. Clearly state assumptions in text boxes at the bottom of each tab. The statements should balance and reconcile, e.g., Retained Earnings calculated correctly, ending cash matching balance sheets, net income aligning with cash flow statements.

The Excel workbook must be professionally formatted: consistent number formatting, dollar signs, underlined totals/subtotals, indented/bolded descriptions for readability. All calculations, including totals, subtotals, and analysis figures, should use formulas. Examples are provided in Exhibits A and B. The assignment will be checked for originality via Turnitin.

Paper For Above instruction

Financial statement analysis and projections are fundamental tools in corporate finance, enabling stakeholders to assess past performance and forecast future financial health. This report outlines the procedures and considerations involved in preparing an advanced financial analysis workbook that includes common sized statements, horizontal analysis, and projections, rooted in research and professional standards.

Introduction

Financial statements provide a vital snapshot of a company's financial health and operational efficiency. For comprehensive analysis, it is essential to incorporate various analytical techniques such as common size analysis, horizontal analysis, and financial projections. These techniques facilitate comparisons across periods, identify trends, and aid in forecasting future performance grounded on historical data, industry insights, and economic indicators.

Common Size Financial Statements

The common size approach converts financial statements into percentages, allowing comparability regardless of size differences. The balance sheet uses Total Assets as the base, while the income statement employs total revenue. Calculating these percentages across three historical years offers insights into asset composition and income structure, highlighting stability or shifts over time. In Excel, formulas linked to the previous statements ensure dynamic updates, maintaining accuracy and efficiency.

Horizontal Analysis

Horizontal analysis evaluates trends by calculating dollar and percentage changes over a series of periods. Copying historical balance sheets and income statements into new sheets allows for clear before-and-after comparisons. This technique identifies growth patterns, declining assets, increasing liabilities, or shifts in operational efficiency, essential for strategic planning and investment decisions.

Financial Projections

Accurate projections rely on a methodical approach combining historical data, industry trends, and economic forecasts. For three projected years, assumptions are documented explicitly—covering sales growth, cost behavior, capital expenditure, and industry-specific factors. These assumptions must be research-backed, citing credible sources such as industry reports, economic forecasts, and company disclosures. Projected statements must be internally consistent; for example, retained earnings are correctly calculated based on net income minus dividends, and cash balances reconcile with cash flow statements.

Methodological Considerations

Consistency in formatting, formulas, and presentation enhances credibility. All calculations should be dynamic, enabling updates and sensitivity analysis. The professional appearance reflects thoroughness and accuracy, instilling confidence in decision-makers analyzing these financial models. Proper linkage between statements ensures that assumptions or data updates automatically correct or revise related figures.

Conclusion

This comprehensive financial analysis workbook exemplifies best practices in financial modeling. Through precise calculations, strategic assumptions, and professional presentation, it offers valuable insights into a company's historical performance and future prospects. Such a tool is indispensable for managers, investors, and analysts in making informed decisions based on reliable data and sound analysis.

References

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• Higgins, R. C. (2012). Analysis for Financial Management (10th ed.). McGraw-Hill Education.
• Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2016). Fundamentals of Corporate Finance (11th ed.). McGraw-Hill Education.
• Gitman, L. J., & Zutter, C. J. (2012). Principles of Managerial Finance (13th ed.). Pearson.
• Damodaran, A. (2012). Investment Valuation: Tools and Techniques for Determining the Value of Any Asset (3rd ed.). Wiley.
• Schroeder, R. G., Clark, M., & Cathey, J. M. (2019). Financial Accounting Theory and Analysis: Text and Cases (13th ed.). Wiley.
• Wilkinson, T. J., & Hopwood, W. S. (2019). Financial Statement Analysis & Valuation. Cengage Learning.
• Ohlson, J. A. (1995). Earning Power, Book Value, and Dividends in Equity Valuation. Contemporary Accounting Research, 11(2), 661-687.
• Economic Research Service. (2023). Industry Outlook and Economic Trends. USDA.