Instructions

Instructions for Using HISTORY

"Word has come down from the dean

That with the aid of a teaching machine
Ole' Oedipus Rex could have learned about sex
Without ever disturbing the Queen."
Lewis Spitz

HISTORY is intended as a companion to ANALYSIS FOR FINANCIAL MANAGEMENT,

6th edition, by Robert C. Higgins. Some basic familiarity with Microsoft Excel will be helpful,
but not necessary, to use this program.

HISTORY produces a financial analysis of up to five years of user-supplied, historical

financial data. Results appear in four, convenient tables of one page each. Balance sheet and
income statement entries can be customized to a limited degree to reflect the reporting
practices of individual companies. HISTORY can be used with its companion program,
PROFORMA, to produce up to five-year forecasts of future financial performance and possible
funding needs.

Input
Table Contents
A Historical balance sheets 1-5 years
B Historical income statements 1-5 years
Output
C Change in balance sheet accounts
D Common-size balance sheets
E Common-size income statements
F Ratio and sustainable growth analysis

INSTRUCTIONS FOR USE

All of the worksheets in HISTORY are tied to the Main Menu, from which you selected the
Instructions button. To launch the other worksheets, simply choose the appropriate button from
the Main Menu. You can return to the Main Menu at any time by selecting the Main Menu
button from any worksheet.

You may want to begin by printing a copy of these instructions. To do so, use the regular
Print command in your software. You can print any of the Output Tables this way.

Enter Data
Leave these instructions and return to the main menu by pressing the button at the top of
this page. At the main menu, select Input Data. A dialog box will appear and you can
enter the information about your company. After entered your data and hit "OK", you
will go automatically to the Historical Balance Sheets so you can begin your analysis.
Input your numbers in the blue areas. Don't worry about formatting, that is done
automatically. You may also customize any label in blue simply by typing over the field name.

Page 1
 Instructions

When you've finished, click the button for the Income Statement and continue entering data
in the blue areas until you have completed the historical income statements and balance sheets.

Perform Calculations
When you have entered your data, press the Analyze button and you will return
to the main menu.

View Results
To view the results of the analysis, press the View Output button. You may then select
from the three output tables which you want to view. If at any time you want to make
changes to the data in the historical tables, you can also view those by pressing the View
Output button and selecting the input table. Once you are in the table, change the data, return
to the Income Statement (unless you are there already), and press Analyze again.

Clear
The Clear button on the Main Menu clears all the tables so you can analyze a new
company. If you want to save your work, use the Save As command in your software
and rename this program.

Page 2
 Definitions

DEFINITIONS OF RATIOS APPEARING IN TABLE F

Return on equity = net income/total equity

Return on assets = net income/total assets

Return on invested capital = [(income before tax + interest expense)

(1 - provision for tax/income before tax)]/(short term debt + other s.t. debt +
current portion long term debt + long term debt & capital leases + minority interest + total equity)

Profit margin = net income/net sales

Gross margin = gross profit/net sales

Assets to equity = total assets/total equity

Tot. liabilities to assets = total liabilities/total assets

Tot. liabilities to equity = total liabilities/total equity

Long term debt to equity = (l.t. debt & capital leases + currrent portion l.t. debt)/total equity

Times interest earned = (income before tax + interest expense)/interest expense

Times burden covered = (income before tax + interest expense)/

interest expnse + current portion l.t. debt/[1 - provision for tax/income before tax])

Current ratio = current assets/current liabilities

Acid test = (current assets - inventory)/current liabilities

Asset turnover = net sales/total assets

Inventory turnover = cost of goods sold/inventory

Collection period = accounts receivable/(net sales/365)

Days sales in cash = cash/(net sales/365)

Payables period = accounts payable/(cost of goods sold/365)

Fixed asset turnover = net sales/net property, plant, etc.

Retention ratio = [(1 - common dividends)/net income]*100

Page 3
 MainMenu

MAIN MENU

Copyright 2000, Irwin/McGraw-Hill.

This computer program is protected by copyright law.

Page 4
 MainMenu

History

Page 5
 DData

Month Date Analysis Years

January 1 1
Februrary 2 2
March 3 3
April 4 4
May 5 5
June 6
July 7
August 8
September 9
October 10
November 11
December 12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

Page 6
 HistoryDialog

Input Company Data

Company Name Spencer Sporting Goods

Currency, Scale (000 omitted)

(e.g. $ in Millions)

Fiscal Year End January 1

Februrary 2
March 3 OK
First Analysis Ye... April
1994 4
May 5
June 6 Cancel
Number of Years 1
July 7
to Analyze 2
August 8
3
September 9
4
October 10
5
November 11
December 12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31

Page 7
 TableViewer

HISTORY Tables

Select The Table You Wish to View OK

Input Tables Cancel

Table A: Historical Balance Sheets
Table B: Historical Income Statements

Output Tables
Table C: Change in Balance Sheet Accounts
Table D: Common-size Balance Sheets
Table E: Common-size Income Statements
● Table F: Ratio and Sustainable Growth Analysis

Page 8
 A B C D E F
1 Table A. Historical Balance Sheets
2
3 Spencer Sporting Goods
4
5 (000 omitted)
6 December 31
7
8
9 ASSETS 1994 1995 1996 1997
10 Cash $36 $33 $25 $15
11 Securities
12 Accounts receivable 402
13 Inventory
14 Other current assets
15
16 Total current assets 438 33 25 15 -
17
18 Net property, plant, etc.
19 Other investments
20 Other long-term assets
21
22 Total Assets $438 $33 $25 $15 -
23
24 LIABILITIES AND SHAREHOLDERS' EQUITY
25 Short term debt
26 Other short-term debt
27 Accounts payable
28 Accrued taxes
29 Other accruals
30 Current portion l-t. debt
31
32 Total current liabilities - - - - -
33
34 L-t. debt and capital leases
35 Deferred taxes
36 Other deferrals
37 Minority interests
38 Other long-term liabilities
39
40 Total liabilities - - - - -
41
42 Preferred stock
43 Owners' equity
44 Total equity $- $- $- $- -
45
46 Total liabilities & equity $- $- $- $- -
47
48

Analysis for Financial Management, 6th Ed.

12/16/2010 by Robert C. Higgins
Published by Irwin/McGraw-Hill
 A B C D E F
1 Table B. Historical Income Statements
2
3 Spencer Sporting Goods
4
5 (000 omitted)
6 December 31
7
8
9 1994 1995 1996 1997
10 Net sales
11 Cost of goods sold
12
13 Gross profit - - - - -
14
15 Operating expenses
16
17 Operating income - - - - -
18
19 Non-op. income (expense)
20 Interest income
21 Interest expense
22
23 Income before tax - - - - -
24 Provision for tax
25
26 Net income $- $- $- $- -
27
28 Ex. gains (loss) net tax
29 Other gains (losses)
30 Preferred dividends
31
32 Available for common $- $- $- $- -
33
34 Common dividends
35
36 Added to retained earnings $- $- $- $- -

Analysis for Financial Management, 6th Ed.

12/16/2010 by Robert C. Higgins
Published by Irwin/McGraw-Hill
Table C. Changes in Balance Sheet Accounts*

Spencer Sporting Goods

(000 omitted)
December 31

ASSETS 1995 1996 1997

Cash $(3) $(8) $(10) (15.00)
Securities - - - -
Accounts receivable (402) - - -
Inventory - - - -
Other current assets - - - -

Total current assets (405) (8) (10) (15)

Net property, plant, etc. - - - -

Other investments - - - -
Other long-term assets - - - -

Total Assets $(405) $(8) $(10) (15.00)

LIABILITIES AND SHAREHOLDERS' EQUITY

Short term debt - - - -
Other short-term debt - - - -
Accounts payable - - - -
Accrued taxes - - - -
Other accruals - - - -
Current portion l-t. debt - - - -

Total current liabilities - - - -

L-t. debt and capital leases - - - -

Deferred taxes - - - -
Other deferrals - - - -
Minority interests - - - -
Other long-term liabilities - - - -

Total liabilities - - - -

Preferred stock - - - -
Owners' equity - - - -
Total equity - - - -

Total liabilities & equity $- $- $- -

*ASSETS: + (Positive) = Use and - (Negative) = Source ; LIABILITIES: + = Source, - = Use

Analysis for Financial Management, 6th Ed.

12/16/2010 by Robert C. Higgins
Published by Irwin/McGraw-Hill
Table D. Common Size Balance Sheets

Spencer Sporting Goods

(000 omitted)
December 31

ASSETS 1994 1995 1996 1997

Cash 8.2% 100.0% 100.0% 100.0% #DIV/0!
Securities 0.0% 0.0% 0.0% 0.0% #DIV/0!
Accounts receivable 91.8% 0.0% 0.0% 0.0% #DIV/0!
Inventory 0.0% 0.0% 0.0% 0.0% #DIV/0!
Other current assets 0.0% 0.0% 0.0% 0.0% #DIV/0!

Total current assets 100.0% 100.0% 100.0% 100.0% #DIV/0!

Net property, plant, etc. 0.0% 0.0% 0.0% 0.0% #DIV/0!

Other investments 0.0% 0.0% 0.0% 0.0% #DIV/0!
Other long-term assets 0.0% 0.0% 0.0% 0.0% #DIV/0!

Total Assets 100.0% 100.0% 100.0% 100.0% #DIV/0!

LIABILITIES AND SHAREHOLDERS' EQUITY

Short term debt #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Other short-term debt #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Accounts payable #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Accrued taxes #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Other accruals #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Current portion l-t. debt #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Total current liabilities #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

L-t. debt and capital leases #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Deferred taxes #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Other deferrals #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Minority interests #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Other long-term liabilities #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Total liabilities #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Preferred stock #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Owners' equity #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Total equity #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Total liabilities & equity #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Analysis for Financial Management, 6th Ed.

12/16/2010 by Robert C. Higgins
Published by Irwin/McGraw-Hill
Table E. Common Size Income Statements

Spencer Sporting Goods

(000 omitted)
December 31

1994 1995 1996 1997

Net sales #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Cost of goods sold #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Gross profit #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Operating expenses #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Operating income #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Non-op. income (expense) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Interest income #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Interest expense #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Income before tax #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Provision for tax #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Net income #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Ex. gains (loss) net tax #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Other gains (losses) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Preferred dividends #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Available for common #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Common dividends #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Added to retained earnings #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Analysis for Financial Management, 6th Ed.

12/16/2010 by Robert C. Higgins
Published by Irwin/McGraw-Hill
Table F. Ratio and Sustainable Growth Analysis

Spencer Sporting Goods

1994 1995 1996 1997

PROFITABILITY RATIOS:
Return on equity (%) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Return on assets (%) 0.0% 0.0% 0.0% 0.0% #DIV/0!
Return on inv. captial (%) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Profit margin (%) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Gross margin (%) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

LEVERAGE & LIQUIDITY RATIOS:

Assets to equity (%) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Total liabilities to assets (%) 0.0% 0.0% 0.0% 0.0% #DIV/0!
Total liabilities to equity (%) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Long term debt to equity (%) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Times interest earned (x) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Times burden covered (x) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Current ratio (x) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Acid test (x) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

TURNOVER-CONTROL RATIOS:
Asset turnover (x) - - - - #DIV/0!
Inventory turnover (x) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Collection period (days) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Days sales in cash (days) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Payables period (days) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Fixed asset turnover (x) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Pro Forma Sustainable Growth Analysis

1994 1995 1996 1997

REQUIRED RATIOS:
Profit margin (P) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Retention ratio (R) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Asset turnover (A) 0.0% 0.0% 0.0% 0.0% #DIV/0!
Financial leverage# (T) n/a #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Sustainable growth rate (g*) n/a #DIV/0! #DIV/0! #DIV/0! #DIV/0!

Actual growth rate (g) n/a #DIV/0! #DIV/0! #DIV/0! #DIV/0!

#Defined as assets divided by beginning-of-period equity

Analysis for Financial Management, 6th Ed.

12/16/2010 by Robert C. Higgins
Published by Irwin/McGraw-Hill