Ratio analysis and vertical analysis, Financial Accounting

Balance Sheets: contains the balance sheets as of December 31, 2010, 2009, and 2008. Accounting practice and tradition dictates that the most current year is placed nearest to the labels.

Income Statements:  contains the income statements and the statements of retained earnings for the years ended December 31, 2010, 2009, and 2008. Again accounting practice and tradition dictates that the most current year is placed nearest to the labels.

Cash Flows: contains the statements of cash flows for the years ended December 31, 2010, and 2009. Again accounting practice and tradition dictates that the most current year is placed nearest to the labels.

Ratios: contains a list of the ratios you need to calculate for years 2010 and 2009 only.

Vertical Analysis

Perform vertical analysis on the balance sheets and income statements for the three years presented. The vertical analysis should be performed on the same worksheet that the financial data appears on.

Ratio Analysis

Calculate the required ratios on the Ratios worksheet for the two years 2010 and 2009 only. The ratios should be calculated on that sheet. Hint: You may want to capture the needed information from the other worksheets onto the Ratios page first; think about what amounts are required from each statement and then capture those in an organized manner. Once all the needed info is in place, you can calculate the required amounts without leaving the Ratios worksheet; it's just a suggestion. 

Commentary

Is there anything that catches your attention as a result of the calculations you have performed?  Is some measure significantly improving or deteriorating.  Are there accounts or line items that you would specifically like to discuss with the management of Demonstration Corporation because they seem to indicate a current or pending problem for the company? Submit your thoughts and comments in a separate Word document.

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