Appraise the financial health and performance of a company.
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.
You discuss your plan with the director, and you both decide that you should create an Excel file containing four tabs, labeling the four tabs as follows:
- Tab1: â€œIncome statement vertical analysisâ€
- Tab 2: â€œIncome statement horizontalâ€
- Tab 3: â€œBalance sheet vertical analysisâ€
- Tab 4: â€œBalance sheet horizontal analysisâ€
In addition, you both decide it best to also create a Word document with your assessment of each companyâ€™s performance and support which company is the better acquisition target.