Each member will work on an individual company from the industry the group has chosen.
Step 3 of the Analytical Framework.
Assess the quality of the F/S.
Review of the purpose, underlying concepts and format of the financial statements.
Make any necessary adjustments to the financial statements (Chapter 5). Consider adjusting:
LIFO to FIFO,
Allowance for doubtful account
Make the necessary adjustments to your company’s financial statements for the past 2 year
Step 4 of the Analytical Framework. Analysis of Profitability and Risk. This is the ratio analysis.
After completing the adjustments above,
Rearrange the balance sheet and income statement into operating and financing sections (Chapter 3)
Use the adjusted rearranged financial statements to calculate 2 years of ratios for your company (Chapter 6)
Get the ratios from one of your team members.
Compare the current year’s ratios for your company with your competitor’s current year’s ratios and your company’s prior year’s ratios. This should include all
the ratios we calculated in the homework
Discuss your company’s current year’s performance compare to last year’s performance and to your team member’s ratios. This should include
ROE and its breakdown into RNOA Spread (RNOA-cost of financing), and Leverage,
the ratios for Liquidity, Solvency, Operating, and Investing.
Include an executive summary of your findings.
This is the first paragraph of your paper
It summarizes your findings
It should be approximately 50 words but total will be 500 words