Business Finance - Management Week 5 Assignment- Managerial Finance

Module 2 Assignment: Financial Health Assessment: Barry Computer Company

Report prepared by: Replace this text with your name.

Date: Replace this text with the submission date.

Walden University

MBAX 6070: Managerial Finance

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Part 1: Financial Information

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Part 2: Recommendations

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References

[Please delete this note before submitting your Assignment. For more information about formatting your reference list, please visit the following site: https://academicguides.waldenu.edu/writingcenter/apa/references .]

Include appropriately formatted references to support your Assignment. Refer to the Assignment guidelines for further information on the requirements.

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Week 5 Learning Resources

Managerial Finance

Financial Statements and Reports

Although some publicly traded companies provide access to their annual reports on their websites, all public companies must file their audited financial reports with the Securities and Exchange Commission (SEC). This is done so through a 10K report, which is the legal and official report from which the company’s financial data is to be obtained. Using these resources, you will examine the role of financial statements for publicly traded corporations, as well as how to examine a 10K report.

· Brigham E. F., & Houston, J. F. (2022). Financial statements, cash flow, and taxes. In  Fundamentals of financial management (16th ed., pp. 64–106). Cengage Learning.

· Securities and Exchange Commission. (2011, September).  Investor bulletin: How to read a 10-K  Download Investor bulletin: How to read a 10-K . https://www.sec.gov/files/reada10k.pdf

Measures That Illustrate Financial Health

When trying to determine a company’s financial standing, a common practice is to explore its industry and compare its financial performance to the industry averages. There are many aspects that can be used as a comparison, which can be useful for stakeholders to understand. By having a better understanding of a company’s financial health, managers become better decision makers and help drive their organization toward success. Through these resources, you will examine how financial statements can reveal the state of an organization’s financial health.

· Brigham E. F., & Houston, J. F. (2022). Analysis of financial statements. In  Fundamentals of financial management (16th ed., pp. 108–128). Cengage Learning.

· 365 Careers. (2020, July 17).  Dupont analysis explained Links to an external site.  [Video]. YouTube. https://www.youtube.com/watch?v=hHuItcTJJcs

· IBISWorld. (2016, November 6).  Financial ratios – IBISWorld industry product Links to an external site.  [Video]. YouTube. https://www.youtube.com/watch?v=6-JlnqWlyoU

· FinanceWalk [Avadhut Nigudkar]. (2014, January 24).  Ratio analysis, financial ratio analysis in Excel Links to an external site.  [Video]. YouTube. https://www.youtube.com/watch?v=WH1afIA6sEk

· Learn to Invest. (2018, November 23).  ROE DuPont analysis: How to use the DuPont equation to analyze a stock: DuPont decomposition Links to an external site.  [Video]. YouTube. https://www.youtube.com/watch?v=qRBHfpyTDU8

Important Documents for The Week

· Document:  Module 2 Assignment Part 1 Template (Excel spreadsheet) Download Module 2 Assignment Part 1 Template (Excel spreadsheet)

· Document:  Module 2 Assignment Part 2 Template (Word document)

Week 5 Assignment

Managerial Finance

Financial Health Assessment: Barry Computer Company- Part 1

Module 2 Assignment Overview

In this module, you will complete a two-part Assignment that is submitted over the course of 2 weeks. This week, you will complete and submit Part 1. You will complete and submit Part 2 in Week 6.

For this Assignment, you will act as a consultant hired by the operations director of the Barry Computer Company to do a financial analysis and comparison to the industry. You will conduct a financial ratio analysis to gain a good understanding of the company’s financial performance and will then write up an evaluation of the organization’s financial health, as well as your recommendations for how specific ratios can be improved within the next 3–5 years.

In your report, be sure to include relevant citations from the Learning Resources, the Walden Library, and/or other appropriate academic sources to support your work.

To prepare for this Assignment:

· Download the Module 2 Assignment Part 1 Template.

· Using problem 4-23 on pages 143–144 of  Fundamentals of Financial Management (Brigham & Houston, 2022), populate the Module 2 Assignment Part 1 file with the necessary information. This will assist you as you develop your report. All formulas are included in the Module 2 Assignment Part 1 file.

· Download the Module 2 Assignment Part 2 Template.  Note: Be sure to keep a copy of your completed Assignment this week, as you will be adding to the same file for your Week 6 Assignment.

Submit your evaluation of an organization’s financial health based on financial ratios, to include the following:

Part 1: Financial Information (2–3 pages, plus Excel spreadsheet)

· Calculate the following ratios for the Barry Computer Company using the Excel spreadsheet provided.

Ratio	Calculation
Current	Current Assets/Current Liabilities
Quick	Current Assets – Inventories/Current Liabilities
Days Sales Outstanding	Receivables/ (Annual Sales/365)
Inventory Turnover	Sales/Inventories
Total Assets Turnover	Sales/Total Assets
Profit Margin	Net Income/Sales
ROA	Net Income/Total Assets
ROE	Net Income/Common Equity
ROIC	EBIT (1 – T)/Total Invested Capital
TIE	EBIT/Interest Charges
Debt/Total Capital	Total Debt/(Total Debt + Equity)
M/B	Market Price/Book Value
P/E	Price per Share/Earnings per Share
EV/EBITDA	(Market Value of Equity + Market Value of Total Debt + Market Value of Other Financial Claims – Cash and Equivalents)/EBITDA

· Analyze computations to determine which ratios are above and below their industry averages, and for each, provide a brief explanation as to why that might be the case. 

· Evaluate the financial health of the organization, including in what areas the organization could improve.