Balance sheet detective

Bloomberg Business

Read "Detective activity" part only( the file is uploaded down: the pages that are included is from page 1 to 7 that need to be solved).

Answer the questions below

Questions:

1. Choose 4 sectors only (the sectors which you are familiar with)

2. Identify the company under each chosen sector (by reading the narrative of each company of each sector). Each sector has two companies.

3. Analyze the Common Size Income Statements and Balance sheets; and Financial ratios of each company.Financial Statements Analysis ● Compare financial statement ratios to identify critical objective elements of a company and diagnose a company’s positives and risks. Companies are as unique as people. But, like people groups of people share similarities. Companies that operate within the same sector or industry tend to share certain characteristics. Such characteristics are highlighted by calculating and comparing a company’s financial ratios. Comparing a company’s ratios over time show if a company is changing, for the better or for worse. Comparing ratios among different companies bring a company’s particular characteristics into focus. The Financial Statements Analysis case study includes two separate components: � Detective Activity This activity compels you to understand why ratios are what they are for a given company or industy. You will practice interpreting financial ratios by matching financial statements to their companies, sorted by sector. This activity includes nine sectors: communications, consumer discretionary, consumer staples, energy, healthcare, industrials, materials, technology, and utilities. � Case Study The case study will require you to access and compare Disney’s financial statements to those of its peers. Use the Terminal Tutorial and Case Study Notes to answer the case questions. ◼ FINANCIAL STATEMENTS ANALYSIS / BLOOMBERG BUSINESSWEEK CASE STUDY 2 Detective Activity ● Use the notes below, the company descriptions, the Common Size Income Statement & Balance Sheet, and Financial Ratio Comparisons to determine which company goes with which data in each sector. This learning supplement contains a short narrative describing two companies that operate within the same sector. Each sector also includes a consider this paragraph intended to guide your thinking and analysis. Read the narrative and consider this paragraph for a particular sector. Then, look at the two columns of sector-specific data. Each column of ratios is identified by a capital letter. Beginning at the top, slowly draw your fingers down the columns, looking for ratios that are different between the two companies. Determine which ratios help you identify which of the two companies belong to which column of data. The first sector in this activity is communications. The two companies within the communications sector are Netflix and AT&T. Data in columns A and B are derived from the Netflix and AT&T financial statements. Find five ratios from columns A and B that are useful in determining which column is Netflix and which is AT&T. The income statement and balance sheet are presented in common size format. Move through this supplement one sector at a time. Read the narratives for the companies and sector and analyze the ratios for the two companies in the sector. Look for ratios that are significantly different from one column to the other. Use the two-finger approach. Take two fingers and go down the columns of data from top to bottom.