Discussions To participate in the following discussions, go to this week’s Discussion link in the left navigation. Comparing Financial Ratios Go to MSN Money. (http://investing.money.msn.com/investments/key-ratios) and type in a ticker symbol for a company with the first letter of your last name. Next, complete the following: a. Select “Key Ratios” on the left menu panel. b. There are several categories listed for ratios. Select one “Financial Condition Ratio” and one “Management Efficiency Ratio”. c. Open the Profile section on the left menu panel and you will see “Industry” is identified. Find a competitive company within that industry and compare those ratios to the ones you just found. Examine your findings and determine whether your company outperforms its competition based on financial ratios. Identify where your firm seems to lag. Describe how your firm compares with the industry and speculate as to why you believe your firm is performing as it is. Guided Response: Review the financial ratios provided by your classmates. Do any seem unusual? Respond to at least two classmates by sharing any reasons you can provide to explain the variance in the ratios. Support your reasons with evidence. Potential Issues in Ratio Analysis As your text describes, ratio analysis is a common technique in financial analysis. One of your colleagues states that a thorough ratio analysis is all that is needed in considering the financial health of a company. Although you agree that ratio analysis is a helpful guide, there may be some potential pitfalls in ratio analysis. Discuss at least three potential issues in utilizing ratio analysis that you would share with your colleague. In addition, calculate a liquidity, profitability, and efficiency ratio from your Week Six company to demonstrate your observations. Develop a 200 – 300 word explanation supporting your findings. Guided Response: Review several of your classmate’s postings. Respond to at least two of your classmates by commenting on any potential issues in using ratio analysis that were new to you. You may also provide another issue that your classmate had not considered. Final Paper To complete the following final paper, go to this week’s Final Paper link in the left navigation. Evaluation of Corporate Performance The Final Project will involve applying the concepts learned in class to an analysis of a company using data from its annual report. Using the concepts from this course, you will analyze the strengths and weaknesses of the company and write a report either recommending or not recommending purchase of the company stock. The completed report should include: An introduction to the company, including background information. A complete and thorough financial statement review. Pro Forma financial statements (Balance Sheet and Income Statement) for the next two fiscal years, assuming a 10% growth rate in sales and Cost of Goods Sold (COGS) for each of the next two years. Complete ratio analysis for the last fiscal year using at least two ratios from each of the following categories: a. Liquidity b. Financial leverage c. Asset management d. Profitability e. Market value Calculate Return on Equity (ROE) using the DuPont system. Assess management performance by calculating Economic Value Added (EVA). Review of the soundness of the company’s financial policies (e.g. capital structure, debt, leverage, dividend policy, etc.) based on the material covered during class. A synopsis of your findings, including your recommendations and rationale for whether or not to purchase stock from this company. This report should be 15 – 20 pages long excluding title page and reference page(s) using APA 6th edition formatting guidelines. Support your findings and recommendations with evidence from at least five scholarly sources in addition to the annual report; such as the textbook, industry reports, and articles from the Ashford library. Be sure to include links to websites that were used as references or to access company information. Writing the Final Paper The Final Paper: Must be 15 to 20 double-spaced pages in length and formatted according to APA style as outlined in the approved APA style guide. Must include a cover page that includes: – Title of paper – Student’s name – Course name and number – Instructor’s name – Date submitted Must include an introductory paragraph with a succinct thesis statement. Must address the topic of the paper with critical thought. Must conclude with a restatement of the thesis and a conclusion paragraph. Must use at least five scholarly sources. Must use APA style as outlined in the approved APA style guide to document all sources. Must include, on the final page, a Reference Page that is completed according to APA style as outlined in the approved APA style guide. Carefully review the Grading Rubric for the criteria that will be used to evaluate your assignment.
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