DIVERSITY VOLUME 8, NUMBER 1 2004-2005 Assessing A Firm’s Future Financial Health Alicia Kritsonis MBA Graduate Student California State University, Dominquez Hills ABSTRACT The purpose of this article is to explain a step-by-step process that can assess whether a firm will remain in balance over the next two to three years. Various financial ratios will be discussed as a critical aspect of this process analysis. A case study of assessing the future health of the Harley Davidson, Inc. using a
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9 -9 1 1 -4 1 2 REV: MAY 28, 2012 Assessing a Company’s Future Financial Health Assessing the long-term financial health of a company is an important task for management as it formulates goals and strategies and for outsiders as they consider the extension of credit, long-term supplier agreements, or an investment in a company’s equity. History abounds with examples of companies that embarked on overly ambitious programs and subsequently discovered that their portfolios of programs could
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9-911-412 R E V: MAY 2 8 , 2 0 1 2 ________________________________________________________________________________________________________________ Professor Thomas Piper prepared the original version of this note, “Assessing a Firm’s Future Financial Health,” HBS No. 201-077, which is being replaced by this version prepared by the same author. This note was prepared as the basis for class discussion. Copyright © 2010, 2011, 2012 President and Fellows of Harvard College. To order copies or request
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Assessing a Company’s Future Financial Health 911 - 412 3 Steps 1, 2 : Analyze Fundamentals The corporate financial system is driven by a firm’s goals, business unit choices and strategies, market conditions , a n d operating characteristics. The firm’s strategy and sales growth in each of its business units will determine the investment in assets needed to support these strategies; and the effectiveness of the strategies, combined with the response of competitors and regulators
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DETERMINING CREDIT WORTHINESS OF A COMPANY; A CASE OF NATIONAL FABRICATORS I. Introduction/background a. What is the case about? b. What are the issues to be analysed? - What are the options? - What are the decisions to be made? II. Analysis of the issues III. Recommendations with reasons IV. Executive Summary INTRODUCTION/ BACKGROUND What is the case about? In July 1994, the president of National Fabricators
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UST is capable of maintaining its stable financial situation. UST is a major moist smokeless tobacco producer, and the demand on moist smokeless tobacco is growing very fast due to increased government regulation on smoking. Potential business risks: UST has very little debt, which makes it more able to resist potential risk when the economy goes bad. In addition, the legislative environment is not good for UST because the government has the ongoing health concerns. Due to the high price of UST’s
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Analyzing the External Environment of the Firm Chapter 2 1) Because of to minimize or eliminate threats and exploit opportunities, so managers should analyze the external environment 2) This involves a continuous process of environmental scanning and monitoring as well as obtaining competitive intelligence on present and potential rivals. These activities provide valuable inputs for developing forecasts. In addition, many firms use scenario planning to anticipate and respond to volatile
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FINANCE FOR MANAGERS SEMESTER 1 2011/12 ASSIGNMENT 1 Part A. The primary financial statements produced by a wide range of entities are the balance sheet, the income statement and the cash flow statement. These statements taken together provide the essential data required to analyse the financial position and performance of a business. The balance sheet, also known as the statement of financial position, presents the accumulated wealth of a business at a particular point in time
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analysis: Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statements so that the strength and weaknesses of a firm as well as its historical performance and current financial condition can be determined. The term ratio refers to the numerical or quantitative relationship between two variables. Significance or Importance of ratio analysis: • It helps in evaluating the firms performance: With the help of ratio analysis conclusion
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customers are willing to pay for a good or a service True Page: p35 2. A firm’s Value Added is the difference between the value of its outputs and the total costs of the inputs purchased by the firm to provide these outputs True Page: p35 3. One way of creating value by a firm is its “Commerce” activity, which transforms raw material and intermediate products into final products False Page: p35 4. Most of the tools used by top decision-makers in the corporate
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