To participate in the following discussions, go to this week’s Discussion link in the left navigation.
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?
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.
- Profit Margin
|Year Ending December 2012||Year Ending December 2011||Year Ending December 2010|
|Maintenance and Repairs||6,000||9,000||10,000|
|Total Operating Expenses||29,500||27,000||26,000|
|Sales and Administrative Expenses||6,000||4,000||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.
Let at least two of your peers posts know what you changes you would recommend to improve the net margin of the company.
To complete the following assignment, go to this week’s Assignment link in the left navigation.
Please complete each of the exercises below in a word document. Save the document, and submit to in week using the Assignment Submissionbutton.
Carefully review the Grading Rubric for the criteria that will be used to evaluate your assignment.
To complete the following final paper, go to this week’s Final Paper link in the left navigation.
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:
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.
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.
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.