Considering your Cloud Ware Company, compare the November ending Profit and Loss Statement with the end of December Profit and Loss statement. This work should be done in Excel.
Compare the November Balance Sheet with the balance sheet as of December 31st. After analyzing the statements, answer the following questions:
- 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 be calculated. At minimum, the following ratios should be calculated and used to support your arguments:Debt to Equity Ratio (Total Liabilities/Equity) This ratio provides a look at how much the creditors have put into the company compared to how much the owners have put into the company.
- Current Ratio (Current Assets/Current Liabilities) This provides a look at whether the business has enough current 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 Ware business and the lender has asked for a one-year projection of revenue and expenses. To request the loan, you will need to create a Pro Forma one year budgeted income statement broken down over 12 months. You will need to look at the actual ending financial statements for October, November, and December and use this data to help create the forecast for the next fiscal year of business.
Using financial ratios will be critical in supporting your argument for the loan and be aware that most bankers or lenders will not even consider a loan prospect without addressing, for example, the impact of additional debt on your debt to equity ratio.
Note: Excel must be used for creating the analysis and budget and must include formulas for all mathematical calculations including adding, subtracting and sums of columns or groups of cells.
Submit your completed assignment by following the directions linked below. Please check the Course Calendar for specific due dates.