ACG3357CBE; Deliverable 3 – Evaluating Performance and Benchmarking

Scenario

The Corporate Director of Acquisitions has approached you to assist with preparing financial data to help identify a potential new acquisition for your company. They have narrowed down the target to two companies and need your help in selecting the best one. You agree to help and think that the best approach would be to take the two companies and prepare a vertical and horizontal analysis of both the income statement and balance sheets for two years of data.

Company #1
Income Statement
All numbers in thousands
Revenue
Total Revenue
Cost of Revenue
Gross Profit
2018
2017
14,134,732 12,866,757
9,510,238 8,668,505
4,624,494 4,198,252
Operating Expenses
Selling General and Administrative
Total Operating Expenses
Operating Income or Loss
2,576,098 2,395,608
12,086,336 11,064,113
2,048,396 1,802,644
Income from Continuing Operations
Total Other Income/Expenses Net
Earnings Before Interest and Taxes
Interest Expense
Income Before Tax
Income Tax Expense
-7,676
2,048,396
-18,847
2,040,720
677,967
-16,488
1,802,644
-19,569
1,786,156
668,502
Net Income
1,362,753
1,117,654
Balance Sheet
All numbers in thousands
Period Ending
Current Assets
Cash And Cash Equivalents
Short Term Investments
Net Receivables
Inventory
Other Current Assets
Total Current Assets
Long Term Investments
Property Plant and Equipment
Other Assets
Deferred Long Term Asset Charges
Total Assets
2018
2017
1,290,294 1,111,599
512 87,868
75,154
1,641,735 1,512,886
11,847
13,642
3,151,157 2,813,049
712
1,288
2,382,464 2,328,048
187,718
166,966
5,722,051 5,309,351
Current Liabilities
Accounts Payable
Short/Current Long Term Debt
Other Current Liabilities
Total Current Liabilities
Long Term Debt
Other Liabilities
Total Liabilities
1,059,844 1,021,735
84,973 9,902
24,559
1,926,402 1,752,506
311,994
396,493
434,347
412,335
2,672,743 2,561,334
Stockholders’ Equity
Preferred Stock
Common Stock
Retained Earnings
Treasury Stock
Capital Surplus
Total Stockholder Equity
Net Tangible Assets
–
3,796
2,071,400
-318,252
1,292,391
3,049,308
3,049,308
3,919
1,801,138
-272,755
1,215,806
2,748,017
2,748,017
Company #2
Income Statement
All numbers in thousands
Revenue
Total Revenue
Cost of Revenue
Gross Profit
2018
2017
38,972,934 35,864,664
27,831,177 25,502,167
11,141,757 10,362,497
Operating Expenses
Selling General and Administrative
Total Operating Expenses
Operating Income or Loss
6,923,564 6,375,071
34,754,741 31,877,238
4,218,193 3,987,426
Income from Continuing Operations
Total Other Income/Expenses Net
Earnings Before Interest and Taxes
Interest Expense
Income Before Tax
Income Tax Expense
-44,982
4,218,193
-8,860
4,173,211
1,113,413
-130,838
3,987,426
-64,295
3,856,588
1,248,640
Net Income
3,059,798
2,607,948
Balance Sheet
All numbers in thousands
Period Ending
Current Assets
Cash And Cash Equivalents
Short Term Investments
Net Receivables
Inventory
Other Current Assets
Total Current Assets
Long Term Investments
Property Plant and Equipment
Goodwill
Intangible Assets
Other Assets
Deferred Long Term Asset Charges
Total Assets
2018
2017
3,030,200
2,758,477
506,165
327,166
4,187,243
12,217
8,485,727
860,000
4,579,000
8,469,200
–
5,255,200
97,600
5,006,053
100,069
144,900
504,000
321,266
6,558
14,326,000 14,058,015
Current Liabilities
Accounts Payable
Short/Current Long Term Debt
Other Current Liabilities
Total Current Liabilities
Long Term Debt
Other Liabilities
Total Liabilities
2,644,100
–
2,488,373
1,429,136
5,125,537
2,230,607
1,331,645
8,909,706
5,531,300
2,233,600
1,512,500
9,277,400
Stockholders’ Equity
Preferred Stock
Common Stock
Retained Earnings
Treasury Stock
Capital Surplus
Other Stockholder Equity
Total Stockholder Equity
Net Tangible Assets
–
5,048,600
–
628,009
4,962,159
-441,859
–
5,048,600
4,951,000
-441,859
5,148,309
4,903,340