WEEK 2 DISCUSSIONS
Discussion 1: Analysis of Financial Statements
A. This discussion assignment will allow for the completion of a ratio analysis. It will also provide information that will be useful as you prepare the written report for Assignment 1: Financial Research Report, which is due at the end of Week 9.
Step 1: Select a publicly-traded company that you will (or might) use for Assignment 1: Financial Research Report, which is due at the end of Week 9.
Step 2: Locate financial ratio data from Mergent Online. Financial statements, ratios, and other useful information are available from the Mergent Online database that is available through the Strayer University Learning Resource Center (online). Please notice that financial ratios are grouped into appropriate categories (Profitability Ratios, Liquidity Ratios, Debt Management Ratios, and Asset Management Ratios), which makes it easy to set up the ratios and use them in the analysis.
Accessing the Mergent Online Database – Financial Statements for companies, financial ratios, and Form 10K annual reports can be obtained from the Strayer University Learning Resource Center, which is accessible from the Online Classroom (see tab at the top of the screen).
Select – Learning Resource Center
Select – Databases
Select Mergent Online
Then, in the block titled “Company Search – Enter Symbol or Company Name” enter the company’s name or its Stock Ticker Symbol (e.g., for McCormick & Company, enter MKC). Next, select the company from the drop-down menu.
For Financial Statements – Select “Company Financials” tab
For Financial Ratios – Select “Company Financials” tab and “Ratios” sub-tab
For Form 10K Annual Reports – Select “Filings” tab (and then select the most recent Annual Form 10K report)
Step 3: Enter the financial ratio data into the Financial Ratio Analysis Model (the attached Excel spreadsheet). The data need to be entered into the yellow-coded cells (column is titled “Oldest Year”) progressing to the most recent year on the left (column is titled “Most Recent Year”).
The model presently contains financial information for McCormick & Company (Stock Ticker MKC).
You will note that the Excel spreadsheet model is programmed to identify if each ratio improved or deteriorated over the time period. And, the spreadsheet is programmed to calculate the percentage change in each of the ratios during the same period. This information should be helpful as you prepare your analysis.
(Note: This spreadsheet could be “imported” into the Assignment 1: Financial Research Report due at the end of Week 10.)
Step 4: Prepare an analysis and discussion of the financial ratio data that are examined in the Financial Ratio Analysis Model. It is always appropriate to include the actual ratio data in the written analysis in addition to its presentation in a table, chart or graph.
(Note: In addition to Mergent, another good source of financial data and company information is: http://www.advfn.com .)
B. From the scenario, determine two (2) financing strategies that TFC could utilize to accomplish its expansion goals. You may, for example, consider your analysis of TFC’s financial statements, as well as your knowledge of TFC’s excessive cash position. What is the rationale for your response?