Week 2 DiscussionCOLLAPSE
Balance Sheet Analysis
The discussion questions for Weeks 2 – 4 are designed to help teach you to derive meaning from financial statements. Each week you will select a line item and use Variance Trend Analysis to make some initial assessments about how the company is performing. Collectively, as a class we will seek to find the “story behind the numbers.”
Let’s start applying what you have learned to a real-life Balance Sheet.
- Locate and post a screen shot of a Balance Sheet from the investor relations section of the website from the latest fiscal year for one of the following companies:
- Pick a Balance Sheet line item from the following list:
- Accounts Receivable
- Property, Plant, and Equipment (PP&E)
- Accounts Payable
- Long-Term Debt
- Total Equity
- Retained Earnings
- What does this line item measure and why is it important item for Management to understand this number?
- From the Balance Sheet, identify the Current Year and the Previous Year closing amounts for your line item. Share these with the class using a data table similar to the below:
Jack’s Toy Shop
- Answer the following questions:
- Has the amount for the line item increased or decreased, and by how much (dollar and/or percentage)?
- Is this a “good” thing or a “bad” thing for this company?
- What might this mean for the organization?
- What might management do to improve this line item?