Part 3: Market & Financial Analysis (17.5%)
Applying theories and concepts learned throughout your studies at Trinity, you will perform a market analysis and a financial for the organization you have chosen for this project. This analysis will be written in the form of a consultant’s report, including a title page, table of contents, executive summary, summary of key findings, Recommendations, headings, citations, references, tables and charts where applicable, etc. See Appendix A for the items that should be considered in the Market Analysis.
For the Financial Analysis, applying the theories and concepts learned throughout your studies at Trinity, you will perform a financial analysis for the organization you have chosen for this project. At the beginning of each of the major sections of the financial analysis, put the various financial ratios in a table that pertain to that particular section of analysis. For example, for the cash assessment section put the figures for working capital, current ratio, quick ratio, accounts receivable turnover, inventory turnover, payables turnover, long-term debt/owners’ equity, and cash from operations into a table at the beginning of this section. Include in the table the figures for the comparison companies as well.
The following items that must be considered in the ratio analysis, and well as a comprehensive discussion about the implications of this data for the company:
Cash assessment:
Working capital as a percentage of annual revenue
Current ratio
Quick ratio
Accounts receivable turnover
Inventory turnover
Payables turnover
Long-term debt/Owners’ equity
Cash from operations
Profitability assessment:
ROE
ROA
Profit margins
Asset turnover
Total assets / owner’s equity
EPS
Gross profit margin
Operating income margin
Income before tax margin
Basically, for each ratio, 1) briefly describe what the ratio means, 2) explain any trends that you have noticed in the company’s financial ratios over the past 3 years, 3) explain how well the company is doing with the ratios compared to industry averages, and 4) explain what the company needs to do if they are underperforming with a given ratio. It should take approximately one or two paragraphs per ratio to cover these items.
Calculate the financial ratios for your company for the last three fiscal years (in this case, likely 2018, 2019 & 2020) to look for the financial trends over the past 3 fiscal years. Look for both negative and positive trends.
For the industry averages comparison, calculate the same financial ratios for your company’s top two competitors from their most recent fiscal year (likely 2020 in this case), then compare those ratios to your company’s financial results.
The expectation for the financial analysis is that the students will calculate the ratios themselves. The students should NOT copy the ratios from any on-line sources. You need to be able to prove to me that you can actually do this kind of financial analysis.