Balance Sheet Analysis

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:

FedEx

Target

Pick a Balance Sheet line item from the following list:

Accounts Receivable

Inventory

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

(In thousands)

2018

2017

Inventory

$336.2

$304.5

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?

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