Overview
This is the second milestone leading up to your final project. In Final Project Milestone One, you introduced the business you chose. You examined its financial statements and financial health and reported its financial values. In Final Project Milestone Two, you will make calculations based on the latest information found using Mergent Online about your company and compare the totals with those of one year ago. You will then use these figures to decide whether short-term financing is needed to improve your company’s financial health. Before moving forward, review your instructor’s feedback for Milestone One and incorporate any suggestions.
Scenario
The CFO of your company has asked for your support in preparing a report for the business’s board of directors. Many of the board members are new, and some of them have little background in finance. With this in mind, you will need to write a report that all board members can easily understand.
Directions
For the company you chose for your final project, open the following documents:
The balance sheet, income statement, and cash flow statement from the latest fiscal quarter (from Mergent Online)
The Ratios Most Recent Fiscal Qtr worksheet in the Final Project Financial Formulas workbook (linked in the What to Submit section).
example, if the latest fiscal quarter available is the third quarter in 2023, you’ll compare those results to the same financial calculations from the third quarter in 2022.
Use the documents to calculate key financial ratios.
Then open the following documents:
The balance sheet, income statement, and cash flow statement from the same fiscal quarter one year ago
The Ratios Same Fiscal Qtr 1 Year Ago worksheet
Use the documents to calculate the same financial ratios. Finally, compare those ratios and analyze your results.
Specifically, you must address the following rubric criteria:
Financial Calculations. Calculate accurate financial formulas to assess the business’s current financial health. Specifically, calculate the following formulas using the Ratios Most Recent Fiscal Qtr and the Ratios Same Fiscal Qtr 1 Year Ago worksheets in the Final Project Financial Formulas workbook:
Working capital
Current ratio
Debt ratio
Earnings per share
Price and earnings ratio
Total asset turnover ratio
Financial leverage
Net profit margin
Return on assets
Return on equity
Fiscal Quarter Comparison. Summarize the differences between the following:
The results from your financial calculations of the most recent fiscal quarter
The results of the same financial calculations of the same fiscal quarter from one year ago
For example, if the most recent fiscal quarter available is the third quarter in 2023, you’ll compare those results to the same financial calculations from the third quarter in 2022.
Comparison Analysis. Explain what your calculations and comparison show about the business’s current financial health. Give examples to support your explanation for the following questions:
Do the results show the business is financially healthy or unhealthy? Which results indicate this?
What might be the causes of the business’s financial success or failure?
Is more information needed to determine the business’s financial health? If so, which pieces of information might still be needed?
Short-Term Financing. Explain how potential short-term financing sources could help the business raise funds needed to improve its financial health. Base your response on the business’s current financial information.
What to Submit
Your submission should be a 2- to 3-page Word document (not including title and resource pages) with 12-point Times New Roman font, double spacing, and one-inch margins. Include the Balance Sheet and Income Statement from Mergent Online with your submission. All sources should be cited using APA style. You must also use the Final Project Financial Formulas workbook and submit the following worksheets:
The Ratios Most Recent Fiscal Qtr worksheet from the Final Project Financial Formulas workbook
The Ratios Same Fiscal Qtr1 Year Ago worksheet from the Final Project Financial Formulas workbook
Supporting Materials
The following resources can help you complete this milestone:
Video: Mergent Online: Public Company Financials (4:46)
Watch this video from the Shapiro Library to learn more about how to access and use Mergent Online. This video shows information on the As Reported Currency page within the Company Financials tab. For the purposes of this course, however, the best way to see financial data is to click Standardized beneath the Company Financials tab. This will allow you to access the Standardized Annual Balance Sheet.
Shapiro Library FAQ: How Do I Cite a Company Profile From Mergent Online in APA Style?
Use this resource to help answer any questions you have about citing from Mergent Online.
