...Although CanGo is very successful in their market they have experienced some financial strains due to some of their financial decision making. In 2009 CanGo purchased an online gaming company paid partially with proceeds from IPO or initial public offering. The investment itself can be risky because at times it’s difficult to predict what the stock will do in its initial day of trading and in the near future, in addition most IPO’s are of companies going through a transitory growth period which are subject to additional uncertainty regarding their future values. The purchase of the online gaming company wasn’t really an investment CanGo had to make since their only profitable division is the online book sales division. This additional investment can potentially cause a strain on CanGo’s overall profitability if the online gaming division doesn’t pay for its initial investment. After reviewing CanGo’s financial balance sheet from 2009, something that sticks out is CanGo’s efficiency ratio. The efficiency ratio is calculated by dividing the net sales by the average accounts receivable. The calculation of this ratio is important because it measures CanGo’s efficiency on collecting on credit and collection policies. With this ratio the lower the better because it shows the expenses are low whereas the income and earnings are high. When calculating CanGo’s efficiency ratio: $33,000,000/$50,000,000=.66 or 66%. Generally an efficiency ratio of 50% or less is good, however...
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...Go to the CanGo intranet found in the Report Guide tab under Course Home Use the financial statements from the most recent year to fill in the table below. You may find some formulae calling for an average, e.g., average inventory, average receivables. Because we only have the Balance sheet for one year, you can only use the one year number not an average. Assume interest expense is $0.00 Be sure to cite your references Ratio Formula (express the ratio in words) Detailed calculation (actual numbers from financial statements used for the calculation) Final number (final result of the detailed calculation) Explanation of why ratio is important Example: Term A/Term B (Term A divided by Term B) 1000/2000 .50 This is the explanation of the role of this ratio and why it is important Efficiency Ratio: Receivables Turnover Net Sales/Acct Receivable* 50,000,000/ 32,120,000 1.56 Measures how effective the company's credit policies are. A low ratio could be difficulty collecting or the company is too generous granting credit. The higher the ratio the better. Efficiency Ratio: Inventory Turnover Net Sales/ Total Inventory 9,000,000/ 32,000,000 0.28 Measure how efficiently the company is able to move its merchandise. Review of Industry norms and ratios to compare this company with others in the industry. Financial Leverage Ratio: Debt/Equity Ratio Total Liabilities/ Shareholder's Equity*** 94,900,000/ 141,000,000 67.30%...
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...Week 2 Team Project A meditation pool and platform I am going to oversee the design, permitting and construction process of a meditation pool and platform while maintaining an on schedule and within budget project. Team Members: Amy Boyd Project Manager Email address: amyboyd69@hotmail.com Gary Boyd Construction Coordinator Email address: garyboyd1@hotmail.com Denise Philhower Bookkeeper Email Address: mpurpleme78@hotmail.com Mary Boyd Government Liason/Permit Coordinator Email Address: Msboyd01@aol.com Think about what you love about being in the garden in terms of relaxing and offloading your stress. Take those memories and feelings and translate them into practical ideas of how you would like to see a meditation pool and platform aimed totally at relaxation and peace * Try to see this garden as an "outdoor room". It's a place where you'll go to relax, rest, and recline, so it will need to have features in it that you find comfortable, and comforting. PROJECT OBJECTIVE To construct a high-quality, meditation pool with a platform for a tranquil and relaxing place to visit within a budget of 65,000 . DELIVERABLES * A 320-square-foot meditation pool * A 3040 square ft. platform of brick pavers * With multiple 40 gallon planters scattered throughout the observation area with year round and seasonal foliage. MILESTONES * 1. Permits approved—July 15 * 2. Grading and site prep including compaction testing—July 20 weather permitting ...
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...Financial Information Assumptions Balance Sheet Income Statement Assumptions: At the beginning of 2009, CanGo purchased the online gaming company. This purchase was for cash, paid for through the proceeds of the IPO and results in goodwill. 90% of the online book sales comes from JIT, the other 10% through the inventory which CanGo possesses. 100% of the CD/DVD/MP3 come through CanGo inventory. The result is that 80% of ALL sales is JIT and 20% is inventory. There is one warehouse for shipping of books and one plant for manufacturing. There are three divisions: a CD/DVD/MP3 division, an online gaming division and a books division. All manufacturing takes place in the CD/DVD/MP3 division. The IPO took place at the beginning of 2009. The CD/DVDs were customized beginning in 2008. The MP3 players were built beginning in the start of 2009. The online gaming company was purchased for $30,000,000 and both Elizabeth and Andrew initiated the process. The company began in 2006, has a VC infusion in 2007 and 2008. It showed a profit in 2008 and 2009. Its only profitable division is the online book sales division. It has some type of international operations, hence the need for a "translation gain or loss" in owner's equity. It has an extraordinary loss from fire and a sale of a segment of its business in 2009. Balance Sheet ASSETS December 31, 2009 Cash $20,900,000 Marketable Securities $117,000,000 Accounts Receivable $33,000...
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...What is financial accounting? Financial accounting is regarded as a professional in modern society. Most of the firms, especially the large ones, need it and have a particular department or team called accounting. In universities, financial accounting becomes a compulsory subject which BBA students must study. It is so well known that almost all people have heard of it. What actually is financial accounting? More specifically, what the main objectives or roles financial accounting has so that firms need it at a critical manner? Generally speaking, the purpose of accounting is to give relevant data or information that is necessary to make sound decision for the firms. And the main objective of financial accounting is to prepare financial statements such as statement of financial position, income statement, statement of owner’s equity and statement of cash flow. The preparation must be guided by generally accepted accounting principles, “GAAP” in short, of the physical location. The statements are then used to tell the external users the performance of the firm (Eisen, 2003). And the primary need for financial accounting, or sometimes called financial accountancy, is to minimize the principal-agent problems in organizations. This is to be done by evaluating and monitoring agents’ (manager) production and presenting the performance to people who interest in. In addition, financial accounting serves a lot of important objectives. It aims to understand the operation of the business...
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...Financial Analysis Tools Nicola Maclin American Military University Managers should have the ability to assess performance of decisions they have made or intend to make, through structured and robust financial analysis. Managers need tools to forecast or predict as they struggle to make decisions on a daily basis to execute business strategy for the company. Financial analysis tools can drive projections and predictions in many areas of the business, from planning for production and distribution to decisions on a product or service. Managers can use these tools to both assess and improve business performance. Performance evaluation is an important component of managing a business. Managers need feedback to evaluate how well they have accomplished business strategy and managed key business process. Managers need to be able to link strategy with profitability. Financial analysis tools can help provide that much needed feedback. Financial data can be used to compute ratios analysis. These financial ratios gives managers the first look at the company’s vital signs and is used to assess a complete financial health and identify operational problems. Ratio analysis allows management to quickly and efficiently address concerns like: return on capital investment and the company’s profit margin. Ratio analysis can be an effective and useful management tool if ratios are calculated on items that are meaningful and where practical steps can be taken to make improvements in...
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...Business Analysis and Valuation Report Prepared By: Version # Updated on ------------------------------------------------- Acknowledgments ------------------------------------------------- If applicable, include acknowledgement to contributing individuals: ------------------------------------------------- ------------------------------------------------- Analyst’s Name | Number | E-Mail Address | | | | Document Name | | Date Created | | Milestone 1 date submitted | | Milestone 2 date submitted | | Milestone 3 date submitted | | Finalization date | | | | | | | | REPORT VERSION RECORD The Business Analysis and Valuation Report is a managed document with tracking of versions, changes, and release dates for each of the three milestones. Version Name | Version Number | Date | Author(s) Name(s) | Change Description | | | | | Document created | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Milestone versions of the report are issued including the complete document with the sections completed to date to reflect the work to date by the analyst team. The milestone versions of the document are authorized for release only after the analyst’s signature has been obtained. Milestone 1 PREPARED: DATE:___/___/___ (for acceptance) (, signature) POSITION: ___ Milestone 2 PREPARED: DATE:___/___/___ ...
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...What types of financial ratios are used to analyze financial performance? Financial ratios are categorized corresponding to the data they provide. The following terms are types of ratios used: 1. Liquidity ratios 2. Asset turnover ratios 3. Financial leverage ratios 4. Profitability ratios 5. Dividend policy ratios Are some more important than others? Why? Financial ratios give insight into an organization’s way of management and its financial state. Most ratios defined above can be evaluated from data made available by compiled financial statements. Which ratios are important to creditors, investors, and managers? Why? The importance of these rations allows a firm to analyze the market place and to measure the firm's financial data against those of other companies to steer away from unwanted financial problems- shutting down of operations. What is the purpose of financial statement analysis? According to (Robinson, Henry and Pirie, 2012), the purpose of a financial statement analysis is comprised of: • Evaluation of equity/debt investment/credit rating • Transfer of information • To use an analysis to develop a given financial statement inquiry. Robinson, T. A., Henry, E., & Pirie, W. L. (2012). International Financial Statement Analysis (2nd ed.). Hoboken, NJ: John Wiley and Sons, Inc.. What are some tools we might use to analyze financial performance? Readyratios.com (2014) informs that analysis of financial performance can be: • SWOT (strength...
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...Week 1 Financial reporting and its analysis has an important role in the information intermediaries (auditors, press, financial analysts) and financial intermediaries (banks, insurance companies, mutual funds) functioning. Information intermediaries and financial intermediaries use the information from the financial reports to investigate the investment opportunities and find the “good” ones (Palepu, Healy & Peek, 2013). The “lemons” problem explains the problem in identifying the “good” and “bad” ideas being offered in the market (Holod & Peek, n.d.). The “bad” ideas are valued by investors at an average level, as they know that in the market there are both types of ideas. This approach, unfortunately, leads to less attractive conditions of financing to the owners of “good” ideas; the proportion of “bad” ideas increases. The identification of “good” investments can be performed by following the four steps (Palepu, Healy & Peek, 2013): * Business strategy analysis * Accounting analysis * Financial analysis * Prospective analysis All the above analysis get the information from the financial statements, publically data available, from business application context that consists of credit analysis, debt analysis, general business analysis and other details on corporate business (Palepu, Healy & Peek, 2013). The business strategy analysis is a tool to form the performance expectations using industry data and competitive strategy data. Accounting analysis assess...
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...9-193-029 REV: SEPTEMBER 13, 2004 WILLIAM BRUNS Introduction to Financial Ratios and Financial Statement Analysis There is almost always a reason why someone picks up an organization’s financial statements and begins to analyze them. Lenders or creditors may be interested in determining whether they will be repaid money they have lent or may lend to the organization. Investors may be interested in comparing a potential investment in one organization with that of another. Employees may want to compare the current performance or financial status of their employer with earlier periods. Regulatory agencies often need to assess organizational or industry financial health and performance. Financial analysis is always based on a set of questions, and the specific questions requiring answers depend on who the financial statement user is and the reasons for his or her analysis. Financial analyses based on accounting information consistently involve comparisons. Amounts or ratios may be compared with industry norms, the same measurement in a prior period, the same measurement in a competitor’s organization, or with planned and budgeted amounts previously established. Figuring out which comparisons will best answer the questions motivating the analysis is one of the necessary steps in making the best use of accounting information. Financial ratios can help describe the financial condition of an organization, the efficiency of its activities, its comparable profitability...
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...Introduction: Financial Statement Analysis is used by interested parties such as inventors, creditors, and management to evaluate the past, current and projected condition and performance of the firm. Its analysis helps user make better desiccations. Ration analysis is the most common form of financial analysis. It provides relative measures of the firm’s conditions and performance. Horizontal analysis and Vertical analysis are also popular forms. Horizontal analysis is used to evaluate the trend in the accounts over the years, while vertical analysis, also called a common size Financial Statement discloses the internal structure of the firm. It indicates the existing relationship between sales and each income statement account. It shows the mix of assets debt that produces income and the mix of the sources of capital, where by current or long-term debt of by equity funding. Financial Statement Analysis prepared for the internal auditors, Many different financial measures are used to analyze financial statements and rank the performance of competing investment opportunities, including growth in sales, return to stockholders, profit margin, and return on equity. These are just four possible measures considered and evaluated by investors and creditors. Financial statements presented in various formats to help facilitate analysis. A classified set of financial statements groups items with similar characteristics together. Groupings include categories such as current assets; property...
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... Spring 2014 T TH Financial Analysis and Management Dr. Kamal M. Haddad COURSE OBJECTIVES Fin 423 is designed to develop critical thinking at the individual level, and problem solving competencies at both the individual and group levels. Teamwork and group problem solving are stressed. The course provides a thorough overview of financial analysis, including relevant modern theory and practical applications. Topics include financial statement analysis, financial planning, principles of valuation, capital budgeting, capital structure, and issues in financial policy. The course gives students opportunities to apply financial theory to analyze real life situations in an uncertain environment with an incomplete data set. It is integrative in nature, with special attention to the integration of theory and managerial judgment in the process of making financial decisions. BSBA Goals BSBA students will graduate being Effective Communicators, Critical Thinkers, Able to Analyze Ethical Problems, Global in their perspective, and Knowledgeable about the essentials of business. This class contributes to those goals through its student learning outcomes. LEARNING OBJECTIVES * Use Financial Statements to evaluate firm performance. * Project Financial Statements (B/S, I/S, budgets, etc.). * Use Financial Statements to obtain Cash Flows for the...
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...2 Graduate Thesis By Teia R. Merring Copenhagen Business School Strategic and financial analysis and valuation of B&O 0 1 Executive Summary................................................................................2 Introduction............................................................................................6 1.1Motivation.................................................................................................................. 6 1.2Problem Specification................................................................................................ 8 1.3Problem Identification................................................................................................ 8 1.4Problem Handling .................................................................................................... 10 1.5Structure and Methodology...................................................................................... 12 1.5.1Introduction and Presentation........................................................................... 12 1.5.2Strategic Analysis............................................................................................. 12 1.5.3Financial Statement Analysis ........................................................................... 13 1.5.4Prognoses and Budgets..................................................................................... 14 1.5.5Valuation.......................................
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...University of Phoenix November 7, 2011 Kevin Wilhelmsen Merck’s Business Environment There are many factors a business, such as Merck, must have in order to be successful, for example strong financial statements, leading technology, and globalization. With the help of income statements, balance sheets, and cash flow statements, a financial analysis can be applied in a wide variety of situations to give business managers the information they need to make critical decisions (Financial Analysis, 2010). They also provide information in regards to the financial health of a company. Pharmaceutical companies are using technology to conduct clinical trials, which has proven to be beneficial to research, development, and the introduction of new products. Globalization is also important for Merck when it comes to product distribution. Outsourcing was been adopted by Merck in order to produce equal quality vaccines and medications at a cheaper cost. Review of Finances Analyzing a company’s income statement, balance sheet, and cash flow is a prime way in determining their success. A comparison can be made between the competition in the industry and a leader can be established. An analysis can also show which company is spending more on research and development and in turn, producing better products. After review of the income statements, Merck’s worldwide sales were $12 billion for the third quarter this year, an increase of...
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...and Trend Analysis on WALMART Stores Inc. The tenth tab in your Financial Statement Analysis Template must be labeled Common Sized Balance SheetsThe eleventh tab in your Financial Statement Analysis Template must be labeled Common Sized Income StatementsThe twelfth tab in your Financial Statement Analysis Template must be labeled Horizontal Analysis of Balance SheetsThe thirteenth tab in your Financial Statement Analysis Template must be labeled Horizontal Analysis of Income StatementsInclude the latest three years for the common sized (vertical analysis) and horizontal analysis in Tabs 10–13. *PLEASE WORK OFF OF ATTACHED EXCEL SPREADSHEET. When you open the document, you will see that there are already 9 tabs. Follow the instructions above. You will need to add 4 more tabs labeled appropriately with the above titles (see instructions). Please save the work and send it back to me. PART 2: - Use WORD to complete this part COMPARITIVE ANALYSIS REPORT. - WALMART Examine common sized financial statements and ratios for the company you selected for the Excel project and two of its competitors. Write a 1000-word report in current APA format. Include the following in your report: Compare and contrast the selected company, its competitors, and industry averages Identify the selected company’s strengths and weaknesses and examine the implications for financial statement analysis and future projections. Compute ROA and ROCE and examine the selected company’s financial leverage...
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