Question Description
Considering your Cloud Ware Company, compare the November endingProfit and Loss Statement with the end of December Profit and Lossstatement. This work should be done in Excel.
Compare the November Balance Sheet with the balance sheet as ofDecember 31st. After analyzing the statements, answer the followingquestions:
- What is the financial situation of the company as of November 30?
- Did the financial situation improve, remain the same, or start to decline through the month of December?
- What areas of strength exist in the company? What are the company's weaknesses?
- What are some areas where the company has opportunities for growth for the company's financial situation?
- To help you justify the above answers, financial ratios should becalculated. At minimum, the following ratios should be calculated andused to support your arguments:
- Debt to Equity Ratio (TotalLiabilities/Equity) This ratio provides a look at how much the creditorshave put into the company compared to how much the owners have put intothe company.
- Current Ratio (Current Assets/CurrentLiabilities) This provides a look at whether the business has enoughcurrent assets to pay their current liabilities.
- Profit Margin (Net Income/Sales) This provides a measure of how much profit is earned on each dollar of sales.
You have decided to request a bank loan to expand your Cloud Warebusiness and the lender has asked for a one-year projection of revenueand expenses. To request the loan, you will need to create a Pro Formaone year budgeted income statement broken down over 12 months. You willneed to look at the actual ending financial statements for October,November, and December and use this data to help create the forecast forthe next fiscal year of business.
Using financial ratios will becritical in supporting your argument for the loan and be aware that mostbankers or lenders will not even consider a loan prospect withoutaddressing, for example, the impact of additional debt on your debt toequity ratio.
Note: Excel must be used for creating the analysis and budgetand must include formulas for all mathematical calculations includingadding, subtracting and sums of columns or groups of cells.
Save your assignment as a Microsoft Excel document.
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