Go to http://finance.yahoo.com/q?s=EA&ql=1
Part 1: Please complete the following for Electronic Arts
Inc. in an Excel spreadsheet:
Horizontal and vertical analysis of the Income Statements
for the past three years (all yearly balances set as a percentage of total
revenues for that year).
Horizontal and vertical analysis of the Balance Sheets for
the past three years (all yearly balances set as a percentage of total assets
for that year).
Ratio analysis (eight ratios of your choosing) for the past
three years PLUS a measurement for the creditworthiness of your firm as
measured by Altman’s Z-score. Compare
Electronic Arts Inc to their major competitor Zynga Games, Inc. ( http://finance.yahoo.com/q?s=ZNGA
).
Part 2: The Paper:
4 pages in length.
Include a proper introduction and conclusion.
Include a reference page.
Your paper should provide your reader with an overall
understanding of the financial health of Electronic Arts Inc including the
following:
Discussion of the ratio analysis results, including
rationale for the ratios chosen.
Discussion of all horizontal and vertical analysis from
above.
Discussion of four items from the management discussion of
the firm that support the conclusion formed in your discussion of the financial
results.
Notes….
If you see sales rise by 20% and assets rise by 40%, we have
to ask why this is happening. It would appear that assets have risen too far
given the sales that are generated from those assets—why did this occur? You may have to research that type of
question and discuss it in your analysis.
I’d suggest that you start your ratio analysis with the four
ratios found in the DuPont equation. If you discover a weakness in one
component of the DuPont ratios, then it would make sense to look at ratios that
are closely related to the troublesome ratio. For example, if you discover that
the asset turnover is declining over time, then take a look at some related ratios
such as the inventory turnover rate or the average collection period. If you
discover that the equity multiplier is increasing (indicating greater reliance
on debt), then look at some related ratios such as the debt ratio or Times
Interest Earned.
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