Assignment 3: Understanding the Numbers for Better DecisionsIt is the managements responsibility to maximize shareholder wealth as it is based on the organization’s future cash flows. To accomplish this, managers have to understand how to use financial statements for analysis.
In this assignment, you will explain the importance of the statements to the financial reporting process and management decisions.
Tasks:Locate the financial statements of a U.S. publicly-traded company of your choice (the company must have inventory and accounts receivable) by visiting the organization’s Web site to locate the investor section. Or you may use one of the following Websites:
U.S. Securities and Exchange CommissionYahoo Finance(Recommended Type the ticker symbol on the top to search for the company > Financials> Income statement> copy the statement and paste to the Excel file. Do the same procedures for balance sheet. Make sure these statements are in the same file but in different tabs. Then, you can calculate financial ratios using Excel instead of manual.)
Google Finance Review the information presented in the financial statements of the company you selected. Using the company you selected, calculate one ratio from each ratio category located at this Financial Ratios resource.
Complete a trend analysis of each ratio for a three-year period. Describe what the trends you see for your company based on your ratio analysis. What does this mean for the company?
Compare your company’s ratios with those of the industry it is in.
Analyze the financial reporting information and the financial health of the company with the help of the calculated ratios.
NOTE: Please pick a non-financial company. Manufacturing companies would be preferred. (The reason is that other industries might use different accounting items which are not the same as textbook.)
Submission Details: Write a 2 to 3-page research paper explaining each selected ratio, the ratio category, and your individual analysis of the company as compared to the industry and the time sensitive analysis. Include a Microsoft Excel Spreadsheet with your relevant calculations.
Apply APA standards to citation of sources.
Under the bottom, two attachments: “Introduction to Financial Statement Analysis” provides guidelines how to utilize financial ratios to analyze company performance.”Sample_Financial ratio analysis” is the excel format of analysis.
Assignment Grading CriteriaMaximum Points
Submitted the 2 to 3-page paper and included a Microsoft Excel worksheet with appropriate calculations. 10 points
Effectively analyzed and then reported the findings relative to the financial statements and the financial health of the organization. 34 points
Appropriate financial ratios have been selected within each category and computed for three years. Also included the industry comparison and analysis. 24 points
Articulated key points in a clear, logical, and professional manner, with supporting evidence wherever required. 12 points
Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; displayed accurate spelling, grammar, and punctuation. 20 points