Assignment #5
Investigating Your Company’s Liquidity and Capital Structure
Purpose: Enable you to practice a number of techniques to analyze your company’s liquidity and to learn about your company’s capital structure. This assignment focuses on your company’s comparative Balance Sheets (over the past two years).
1. First, list your company’s total current assets for the past two years. Then, compute and list the percentage change in total current assets from the second most recent year to the most recent year.
Total Current Assets Percentage Total Current Assets
Most Recent Year Change 2nd Most Recent Year
$ ________ million ______% $ ________ million
2. First, list the two largest individual accounts that comprise your company’s current assets for the most recent year. Next, list the dollar amounts of each of these accounts for the past two years. Then, compute and list the percentage change in the dollar amount of each account from the second most recent year to the most recent year. Remember to indicate decreases in percentages by placing parentheses around the percentage number.
Name of Asset Account Dollar Amount Percentage Dollar Amount
Most Recent Year Change 2nd Most Recent
___________________ $ ________ million ______% $________million
___________________ $ ________ million ______% $________million
3. First, list your company’s total current liabilities for the past two years. Then, compute and list the percentage change in total current liabilities from the second most recent year to the most recent year.
Total Current Liabilities Percentage Total Current Liabilities
Most Recent Year Change 2nd Most Recent Year
$________million ______% $________million
4. First, list the two largest individual accounts that comprise your company’s current liabilities for the most recent year. Next, list the dollar amounts of each of these accounts for the past two years. Then, compute and list the percentage change in the dollar amount of each account from the second most recent year to the most recent year.
Name of Liability Account Dollar Amount Percentage Dollar Amount
Most Recent Year Change 2nd Most Recent
_____________________ $________million ______% $________million
_____________________ $________million ______% $________million
5. First, compute and list your company’s total working capital for the past two years. Working Capital is Total Current Assets minus Total Current Liabilties.
Working Capital Working Capital
Most Recent Year 2nd Most Recent
$________million $________million
6. Compute and list your company’s Current ratios for the past two years. Show below the dollar amounts of the numerators, the dollar amounts of the denominators, and the ratio answers. Round your answers to the nearest hundreth decimal point (x.xx).
Current Ratio Current Ratio
Most Recent Year 2nd Most Recent
$ $
____________ ____________
$ $
= ______ = ______
7. Do the changes in your company’s working capital and current ratios from the second most recent year to the most recent year indicate that your company is more liquid or less liquid?
Circle one: more liquid less liquid
8. Compute and list your company’s Assets-to-Equity ratios for the past two years. Show below the dollar amounts of the numerators, the dollar amounts of the denominators, and the ratio answers. Round your answers to the nearest hundreth decimal point (x.xx).
Asset-to-Equity Ratio Assets-to-Equity Ratio
Most Recent Year 2nd Most Recent Year
$ $
_____________ ______________
$ $
= ______ = ______
9. Compute and list your company’s Debt-to-Equity ratios for the past two years. Show below the dollar amounts of the numerators, the dollar amounts of the denominators, and the ratio answers. Round your answers to the nearest hundreth decimal point (x.xx).
Debt-to-Equity Ratio Debt-to-Equity Ratio
Most Recent Year 2nd Most Recent Year
$ $
_____________ _______________
$ $
= ______ = ______
10. Do the changes in the Assets-to-Equity and Debt-to-Equity ratios from the second most recent year to the most recent year indicate that your company is using more leverage or less leverage?
Circle one: more leverage less leverage
