Case FA-3801 Excel: Financial Statement Analysis for Jubilee Company

The CEO of Jubilee Company wants a brief analysis of Jubilee’s ability to pay its current liabilities, its ability to pay its debts, and its profitability over the past three years. Selected financial statements for Jubilee Company for the years of 2021 through 2023 can be found at this link. Be sure to download the file from Dropbox rather than simply viewing it (see this link for additional information.)

The links contained in the requirements below are for short tutorial videos on the Excel skills or accounting skills needed to complete the requirement.

Note: Advanced Excel productivity hint: Work with two worksheets side by side (Windows | Mac)

Requirements

  1. Calculate the following measures and ratios for each of the three years (link), putting the formulas in the appropriate cells (Cells B4 through D6) in the RATIOS worksheet. What does this first group of ratios measure?
    • Working capital (link)
    • Current ratio (link)
    • Quick ratio (link)
  2. Calculate the following ratios for each of the three years (link), putting the formulas in the appropriate cells (Cells B7 through D8) in the RATIOS worksheet. What does this second group of ratios measure?
    • Debt ratio (link)
    • Times-interest-earned ratio (link)
  3. Calculate the following ratios for each of the three years (link), putting the formulas in the appropriate cells (Cells B9 through D10) in the RATIOS worksheet. What does this third group of ratios measure?
    • Gross margin percentage (link)
    • Return on sales (link)
  4. Format the ratios (link) in the RATIOS worksheet with the following formats:
    • Working capital: Number, 0 decimal places, Use 1000 Separator
    • Current, quick, debt, and times-interest-earned ratios: Number, 2 decimal places
    • Gross margin percentage and Return on sales: Percentage, 2 decimal places 
  5. Create sparklines in the cells immediately to the right of the earliest year of ratios you calculated (Cells E4 through E10) in the RATIOS worksheet).  (Windows | Mac)  
  6. Save your workbook using your last name combined with the word “ratios” as the file name. (Windows | Mac)
  7. What is your overall assessment of Jubilee’s ability to pay its current liabilities, its ability to pay its debts, and its profitability over the past three years?

Check figures

  • Click on the RATIOS worksheet. If you have created the ratio formulas correctly, you should see the following answers:
    • Working capital in Cell C4 should be $32,960
    • Current ratio in Cell D5 should be 2.62
    • Quick ratio in Cell B6 should be 1.09
    • Debt ratio in Cell C7 should be 42.4%
    • Times-interest-earned ratio in Cell D8 should be 8.4
    • Gross margin percentage in Cell B9 should be 22.74%
    • Return on sales in Cell C10 should be 13.82%

Your completed Excel worksheet should look similar to the Excel screenshot below. Yours will have numbers visible, but it should have content in the same cells and be formatted similarly. Your sparklines will be different.

screenshot

Be sure to carefully check your work.

Tutorial video

If you would like to view a quick overview of the project in Excel, see this link. A different set of financial statements has been used in the tutorial, but otherwise the steps are the same.