Describe and expand on what the company needs to do if they are underperforming with that ratio.
Dear writer:
Part 4: Financial Analysis
Applying theories and concepts learned throughout their studies at TWU, the group will perform a financial analysis for their chosen company. This analysis is to be written in the form of a professional-looking consultant’s report, including a title page, table of contents, executive summary, headings, citations (use endnotes or footnotes), bibliography, etc. The report is to be single-spaced.
A good executive summary usually comes in four parts and for the purposes of this report in four paragraphs:
1) A brief summary of the company being studied (not a repeat of the company overview).
2) A brief summary of the purpose of this market analysis and a financial analysis.
3) A brief overview of the key findings of this report.
4) A few closing remarks about the company going forward based on the findings of this report.
Part 4 – Financial Analysis
For the financial analysis, the following items that must be considered in the ratio analysis, and well as a comprehensive discussion about the implications of this data for the company:
Cash assessment:
Working capital as a percentage of revenue
Current ratio
Quick (Acid Test) ratio
Cash Ratio
Operating cash flow ratio
Accounts receivable turnover (and days to collect)
Inventory turnover (and days to sell)
Operating Cycle in days
Payables turnover (and days to pay)
Leverage:
Debt Ratio
Debt to Equity Ratio
Interest Coverage Ratio
Debt Service coverage Ratio
Profitability assessment:
Return on Equity
Return on Assets
Asset turnover
Gross profit margin
Operating income margin
Income before tax margin
Income before Interest Tax and Depreciation/Amortization
Net Income as a percentage of sales
Average tax rate for three years (actual taxes paid)
Earnings per Share
Growth Ratios
Sales growth annual
Net Income growth annual
EPS grown annual
Dividends growth annual
For each ratio,
1) Briefly describe what the ratio’s purpose is.
2) Describe and expand on how the company is doing with the ratio compared to the competition,
3) Describe and expand on what the company needs to do if they are underperforming with that ratio.
It should take approximately one paragraph per ratio to cover these items. If certain ratios do not apply, simply explain why the ratio would not apply.
For each category of ratios, give an overall evaluation of the company’s financial health, how it compares to the competitors, and what it tells you about the company’s ability to survive, and grow.
For the purpose of thorough analysis, calculate the ratios for the last three years of the company’s financials in order to look for trends.
For the competitor comparisons, chose the company’s top two competitors and calculate the same ratios listed above for the competitors using their financial data from the most recent fiscal year with one comparative year.
