# How does year one compare with year two, and what trend can be seen when you compare the two years?

This assessment includes two parts. Use the templates provided as you complete each part. Both of the templates are linked in the Resources under the Required Resources heading. Note that for Part 2 you will use the template for data but will create your own document to submit.
Part 1: Ratio AnalysisMaking sense of accounting data on financial statements can be difficult. Thankfully, combining numbers from income statements, balance sheets, and other data provides a starting point to analyze a company’s financial results. You now have the opportunity to demonstrate your prowess by identifying and computing financial ratios.Using the Assessment 5, Part 1 Template, analyze and compute the necessary financial ratios. The Financial Statements worksheet in the template contains the income statement, balance sheets, and additional information needed. The Ratio Analysis worksheet contains space for your calculations and answers.
Part 2: Interpreting Financial Statement AnalysisWhat does the calculation of a financial statement ratio represent? How does one year compare to another? Is there a trend to the ratio data? Is the trend positive or negative? What can be done to change the trend? These are some of the questions that can be answered when the ratio data is interpreted. For this part of the assessment, demonstrate your ability to interpret the results of a multi-year financial ratio analysis.On the Assessment 5, Part 2 Template you will find selected ratios for a company over a two-year period. Compare the ratios, and in a separate document (Word or Excel), submit your answers to the following questions: What does the calculation of each ratio represent?

Is the trend from year one to year two positive or negative?
What are the possible reasons for the trend?
What recommendations do you have for turning a negative trend to a positive trend?Submit the completed template for Part 1 and the document you created with answers to the questions for Part 2 for this assessment.Financial Analysis Scoring Guide
Criteria Non-performance Basic Proficient Distinguished
Compute financial ratios using accounting data from financial statements.
Does not compute financial ratios using accounting data from financial statements. Computes financial ratios using accounting data from financial statements, with errors. Computes financial ratios using accounting data from financial statements. Analyzes financial ratio results, and demonstrates insight and understanding of financial statements and data.
Interpret the results of financial ratios.
Does not interpret the results of financial ratios. Interprets the results of financial ratios, with errors. Interprets the results of financial ratios. Interprets the results of financial ratios, and demonstrates insight and understanding of what financial ratios represent and their use for reporting a business’s financial results.
Interpret trends found in a multi-year financial ratio analysis.
Does not interpret trends found in a multi-year financial ratio analysis. Interprets trends found in a multi-year financial ratio analysis, with errors. Interprets trends found in a multi-year financial ratio analysis. Interprets trends found in a multi-year financial ratio analysis, and demonstrates insight and understanding of financial ratio results, trends, and contribution to business decision making.
Recommend strategies to improve financial trends.
Does not apply financial ratio results to financial trend analysis. Applies financial ratio results to financial trend analysis. Recommends strategies to improve financial trends. Recommends strategies to improve financial trends, and demonstrates exceptional insights and understanding of financial ratio application and analysis.

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