Vertical, Horizontal, and Ratio Analysis of Micron Technology Inc.
Financial statements are reports that summarize all the accounting transactions that have taken place during a specific period of time.
Choose a publicly held company and, using the Internet, review its most current annual report. Evaluate the health of the corporation you picked based upon your analysis of its financial statements: balance sheets, income statements, cash flow statements, and statements of shareholders' equity. Then, research a similar sized competitor for comparison.
Instructions
Write a 3–4 page report suggesting ways to improve the company's financial health.
Conduct a vertical, horizontal, and ratio analysis on four financial statements.
Compare the ratio, which includes liquidity, profitability, and solvency, with the industry benchmark and one other comparable competitor.
Synthesize the results of the three financial analysis tests to determine the overall health of the organization.
Present an accurate interpretation of the company's current financial health, including risks. Support your conclusions.
Recommend three ways to improve the company’s financial health, including one example for each that has been used in the industry.
Use three sources to support your writing, including the web address of your chosen company. Choose sources that are credible, relevant, and appropriate. Cite each source listed on your source page at least one time within your assignment.
Vertical, Horizontal, and Ratio Analysis of Micron Technology Inc.
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Vertical, Horizontal, and Ratio Analysis of Micron Technology Inc.
Vertical and Horizontal Analysis
Vertical and horizontal analyses are essential to an organization since they compare performance between items and periods. Shim (2022) asserts that vertical analysis is a technique that experts use to analyze financial accounts by listing the line items as percentages of their prior periods' figures. On the other hand, horizontal analysis is a procedure that specialists use to analyze or compare a business's performance over time.
1 Horizontal analysis formula = ([current period figure- prior period figure]/ prior period figure) X100
2 Vertical analysis formula (income statement) = (income statement item/total sales) X100
3 Vertical analysis formula (balance sheet) = (balance sheet item/total assets[liabilities]) X100
4 Vertical analysis formula (cashflow statement) = (cashflow statement item/ cashflow from corresponding activities) X100
5 Vertical analysis formula (statement of shareholders' equity) = (statement of shareholders' equity item/ shareholders' equity) X100
Vertical and Horizontal Analysis (Income Statements)
Particulars
31/08/2022
Million US $
31/08/2021
Million US $
Horizontal Analysis
Vertical Analysis
Difference Million US $
Difference (%)
31/08/2022
(%)
31/08/2021
(%)
Revenue
30,758
27,705
3,053
11.02
100.00
100.00
Cost of goods sold
16,860
17,282
(602)
(3.48)
54.82
62.38
Gross profit
13,898
10,423
3,475
33.34
45.18
37.62
Operating expenses
4196
4,140
56
1.35
13.64
14.94
Operating income
9,702
6,283
3,419
54.42
31.54
22.68
Non-operating expenses
131
65
66
101.54
0.43
0.23
Pre-tax income
9,571
6,218
3,353
53.93
31.12
22.44
Income taxes
888
394
494
125.38
2.89
1.42
Income after taxes
8,683
5,824
2,859
49.09
28.23
21.02
Other incomes
0
0
0
0
0
0
Net income
8,683
5,824
2,859
49.09
28.23
21.02
Data source: Macrotrends (2023a)
Vertical and Horizontal Analysis (Balance sheets)
Particulars
31/08/2022
Million US $
31/08/2021
Million US $
Horizontal Analysis
Vertical Analysis
Difference Million US $
Difference (%)
31/08/2022
(%)
31/08/2021
(%)
Cash on hand
9,331
8,633
698
8.09
14.08
14.67
Receivables
5,130
5,311
(181)
(3.41)
7.74
9.02
Inventory
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