Financial Statement Analysis Group Project
November 18, 2022
This assignment will introduce you to the concepts of financial statements analysis, help you develop knowledge and skills associated with financial statement analysis, provide a comprehensive example that can be used for application of previously learned concepts and skills, and foster your collaboration and communication skills. You will use the knowledge and skills listed below:
• Horizontal and vertical analysis
• Ratio analysis for liquidity, solvency, profitability, and stock
• Income Statement components of Revenue, Cost of Goods Sold, Gross Margin, Operating Expenses, and Net Income
• Balance Sheet components of Short-term Assets, Long-term Assets, Current Liabilities, Long-term Liabilities, Retained Earnings, and Stockholders’ Equity
• The limitations of Financial Statement Analysis
• Comparing and analyzing the results for financial statement analysis computations
• Evaluating the results of financial statement analysis and producing a conclusion
Throughout chapter 12 we will be using analytical tools to evaluate the performance of VF and Nike. You will also find some financial analysis tools at the end of most chapters. Use the tools introduced in chapters 12 (and at the end of each chapter) to help you analyze this Paper Packaging Company. We do not have a lot of details about the company’s operations, but we do have an Income Statement and Balance Sheet for years 25-28. We also know that this company completed a series of mergers and acquisitions to better position themselves in their market.
You should form a group of 2-5 students. Each group will work together throughout the coverage of Ch 12 to produce (at least) three analytical assessments and a summary of conclusions. The final result of your work will be submitted to your Group Folder in D2L.
Once your group has been formed, identify your group’s preference for your analytical point-of-view (POV) from the two options listed below. Choose one of the following.
1) Investors who are considering purchasing $1,000,000 in a new issuance of stock (about 10%)
2) Lenders who are considering loaning $1,000,000 to the company for a 10-year term at 6% interest
Determine whether to make the investment, or loan the money, and provide an analysis backing up your decision.
Your job is to unravel the information available, analyze the financial statements and draw some conclusions.
Individual Observations –
Review the Financial Statements associated with this project and make some initial observations about the company. Come up with at least 3 observations. (For example, by looking at the Income Statement you can see that the company is currently operating profitably. Your observations can be simple or complex, broad or detailed.)
Submit your analysis to the Assignments Folder in D2L – Financial Statement Analysis. This portion of the assignment is an individual assessment. This is due Tuesday, November 29 (11:59pm). This individual portion is worth 1% out of 6% of the overall project grade.
Perform analysis on the Financial Statements provided for the company. Produce a summary of your conclusion about the company, including the recommendation you make (e.g. to invest or not to invest.
Provide the analytical tools you used (at least three) that support your conclusion or recommendation. Be sure to include a description of your analysis in addition to the computational work.
You should submit:
• A visually appealing one-page summary that presents your conclusions and provides easy-to-understand analytics to support your conclusion.
• Supplemental work to provide the supporting calculations/computations and descriptions of your analysis.
• Group project is worth 5% out of 6% of the overall project grade)
Tips for Success:
Good summaries clearly state the recommendation you are making and the recommendation is then followed by your analysis. Each analysis includes clear computations and a brief description. Both clarity and creativity tend to be valued. When used appropriately, charts, graphs, and visual aids can improve your one-page summary.
This link provides an example of and description of financial analysis. Scroll down to the section on Liquidity Ratios to see an example of a clear presentation followed by a brief description.