Principles of Finance 320

Project Two Milestone

Overview

In preparation for your report in Project Two, you will need to calculate the financial ratios needed to determine your chosen business’s current financial health. Once you’ve calculated these ratios, the results will be used to analyze the business’s current financial position and help them make decisions about how to improve or maintain their financial health. Pay particular attention to working capital management. If liquidity is an issue, consider how the company will meet its short-term obligations.

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Prompt

Using the Project Two Financial Formulas spreadsheet and the balance sheet, income statement, and cash flow statement from Mergent Online for your chosen company, calculate the financial ratios for the most recent fiscal quarter. Then, compare those ratios with the same ratios for the same fiscal quarter from one year prior in Mergent Online, and analyze your results.

Specifically, you must address the following rubric criteria:

• Financial Calculations: Calculate accurate financial ratios to assess the business’s current financial health. Specifically, calculate the following ratios:
• Working capital
• Current ratio
• Debt ratio
• Earnings per share
• Price/earnings ratio
• Total asset turnover ratio
• Financial leverage
• Net profit margin
• Return on assets
• Return on equity
• Fiscal Quarter Comparison: Using Mergent Online, summarize the differences between the results from your financial calculations of the most recent fiscal quarter and the results of the same financial calculations of the same fiscal quarter from a year before for your chosen business.
• For example, if the most recent fiscal quarter available is the 3rd quarter in 2020, then you will compare those results to the same financial calculations from the 3rd quarter in 2019.
• Comparison Analysis: Explain what the results of your calculations and your comparison indicate about the business’s current financial health, providing examples to support your explanation. You might consider the following questions:
• Do the results indicate the business is financially healthy or financially unhealthy? Which results indicate this?
• What might be the cause(s) 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 needed funds to improve its financial health. Base your response on the business’s current financial information.

Rubric: This table lists criteria and criteria group name in the first column. The first row lists level names and includes scores if the rubric uses a numeric scoring method.CriteriaProficientNeeds ImprovementNot EvidentCriterion ScoreFinancial Statement15 points

Explains the various financial statement(s) needed to calculate a business’s working capital and how each statement is used

10.5 points

Shows progress toward proficiency, but with errors or omissions; areas for improvement may include explaining in more detail the various financial statement(s) needed to calculate a business’s working capital and how each statement is used

0 points

Does not attempt criterion

Score of Financial Statement,/ 15Working Capital’s Role20 points

Discusses how effective working capital management supports a healthy business

14 points

Shows progress toward proficiency, but with errors or omissions; areas for improvement may include discussing in more detail how effective working capital management supports a healthy business

0 points

Does not attempt criterion

Score of Working Capital’s Role,/ 20Working Capital Interpretation20 points

Uses the appropriate formula to calculate working capital and discusses the business’s current financial liquidity position

14 points

Shows progress toward proficiency, but with errors or omissions; areas for improvement may include discussing in more detail the business’s current financial liquidity position or using the appropriate formula to calculate the working capital

0 points

Does not attempt criterion

Score of Working Capital Interpretation,/ 20Working Capital Management Direction25 points

Discusses the current direction of the business regarding working capital management

17.5 points

Shows progress toward proficiency, but with errors or omissions; areas for improvement may include discussing in more detail the current direction of the business regarding working capital management

0 points

Does not attempt criterion

Score of Working Capital Management Direction,/ 25Articulation of Response20 points

Clearly conveys meaning with correct grammar, sentence structure, and spelling, demonstrating an understanding of audience and purpose

14 points

Shows progress toward proficiency, but with errors in grammar, sentence structure, and spelling, negatively impacting readability

0 points

Submission has critical errors in grammar, sentence structure, and spelling, preventing understanding of ideas

Score of Articulation of Response,/ 20Rubric Total ScoreTotal/ 100

Overall Score

Overall Score

Not Evident0 points minimum

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