Discussions To participate in the following discussions, go to this week’s Discussion link in the left navigation

Discussions
To participate in the following discussions, go to this week’s Discussion link in the left navigation.

  1. Ratios

    Ratios provide the users of financial statements with a great deal of information about the entity. Do ratios tell the whole story? How could liquidity ratios be used by investors to determine whether or not to invest in a company?

    Guided Response:
    Let at least two of your peers know how debt service ratios can be used by a lender in determining whether or not to lend money to a company.

  2. Profit Margin
Year Ending December 2012 Year Ending December 2011 Year Ending December 2010
Revenues 40,000 35,000 33,000
Operating Expenses
Salaries 15,000 10,000 9,000
Maintenance and Repairs 6,000 9,000 10,000
Rental Expense 2,500 2,500 2,500
Depreciation 2,000 2,000 2,000
Fuel 4,000 3,500 2,500
Total Operating Expenses 29,500 27,000 26,000
Operating Income 10,500 8,000 7,000
Sales and Administrative Expenses 6,000 4,000 3,000
Interest Expense 2,500 2,000 1,000
Net Income 2,000 2,000 3,000

Above is a comparative income statement for Cecil, Inc. for the years 2010, 2011, and 2012. Calculate the profit margin for each of these years. Comment on the profit margin trend.

Guided Response:
Let at least two of your peers posts know what you changes you would recommend to improve the net margin of the company.


Exercise Assignment
To complete the following assignment, go to this week’s Assignment link in the left navigation.

Financial Ratios

Please complete each of the exercises below in a word document. Save the document, and submit to in week using the Assignment Submissionbutton.

Week Five Exercise Assignment

Carefully review the Grading Rubric for the criteria that will be used to evaluate your assignment.


Final Paper
To complete the following final paper, go to this week’s Final Paper link in the left navigation.

Final Paper

Focus of the Final Paper

Write a five-to seven-page financial statement analysis of a public company, and formatted according to APA style as outlined in the Ashford Writing Center. In this analysis you will discuss the financial health of this company with the ultimate goal of making a recommendation to other investors. Your paper should consist of the following sections: introduction, company overview, horizontal analysis, ratio analysis, final recommendation, and conclusions. Your paper needs to include a minimum of two scholarly resources in addition to the textbook as references.

Here is a breakdown of the sections within the body of the assignment:

Company Overview
Provide a brief overview of your company (one to two paragraphs at most). What industry is it in? What are its main products or services? Who are its competitors?

Horizontal Analysis of Income Statement and Balance Sheet
Prepare a three-year horizontal analysis of the income statement and balance sheet of your selected company. Discuss the importance and meaning of horizontal analysis. Discuss both the positive and negative trends presented in your company.

Ratio Analysis
Calculate the current ratio, quick ratio, cash to current liabilities ratio, over a two-year period. Discuss and interpret the ratios that you calculated. Discuss potential liquidity issues based on your calculations of the current and quick ratios. Are there any factors that could be erroneously influencing the results of the ratios? Discuss liquidity issues of competitive companies within the same industry.

Recommendation
Based on your analysis would you recommend an individual invest in this company? What strengths do you see? What risks do you see? It is perfectly acceptable to state that you would recommend avoiding this company as long as you provide support for your position.

Writing the Final Paper

1. Must be five to seven double-spaced pages in length, and formatted according to APA style as outlined in the Ashford Writing Center.
2. Must include a title page with the following:

a. Title of paper
b. Student’s name
c. Course name and number
d. Instructor’s name
e. Date submitted

3. Must begin with an introductory paragraph that has a succinct thesis statement.
4. Must address the topic of the paper with critical thought.
5. Must end with a conclusion that reaffirms your thesis.
6. Must document all sources in APA style, as outlined in the Ashford Writing Center.
7. Must include a separate reference page, formatted according to APA style as outlined in the Ashford Writing Center.

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