Executive Memo and Presentation

JWI 530: Financial Management I Assignment 1B

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Executive Memo and Presentation Due: Monday, 9:00 am (eastern), Week 6 (20% of Final Grade)

Overview

A critical financial accounting skill is the ability to read, analyze, and make actionable decisions from published financial statements. Business leaders gain valuable information from the annual reports of direct competitors, companies that operate in similar fields, and companies in which they are considering an investment or partnership. Instructions You are the CFO of a leading real estate development company, Stanton Properties, Inc. Stanton Properties plans to add a new strategic partner in the physical fitness business to its master planned community (MPC) division. The General Manager (GM) of the MPC division has asked for your assistance in performing a financial analysis to help identify the new physical fitness industry partner. The GM has narrowed the list of potential partners down to two firms, Planet Fitness, Inc. (NYSE: PLNT) and Life Time Group Holdings, Inc. (NYSE: LTH). Both companies use a December fiscal year-end and report their financial statements in thousands of dollars. The analysis period is from 2020 through 2023. The CEO, your boss, has specifically asked for a financial analysis of four key areas: Profitability, Short-Term Liquidity, Debt Management, and Cash Flow. You have decided to organize your work into TWO components:

• Part A: Financial Analysis Snapshot and Initial Findings using data from the companies’ annual reports (Due: Monday, 9:00 am (eastern), Week 5; worth 10% of your final grade)

• Part B: Executive Memo and brief Video Presentation of your analysis (Due: Monday, 9:00 am (eastern), Week 6; worth 20% of your final grade)

Before completing your work on Assignment 1B, carefully review your feedback and address any questions you have from Assignment 1A.

Assignment 1, Part B: Executive Memo and Presentation Present a synopsis of your analysis in an executive memo you would feel comfortable submitting to your CEO. You may organize the memo as you see fit, but it must follow the principles of good business communication. Be sure to include your recommendation to the CEO in your memo, preferably in the opening paragraph and the summary. To support your executive memo, prepare 5 slides and record a brief video presentation highlighting the key points of your findings.

JWI 530: Financial Management I Assignment 1B

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. This document is subject to change based on the needs of the class. JWI 530 – Assignment 1B (1244) Page 2 of 5

For your executive memo, answer the following 11 questions organized under four key topics:

1. Profitability/Net Income Margins • What are both companies' after-tax net income margins (i.e., net profit margins)? • How do the two companies compare? • Which company achieves the higher net income margin? Explain. Tip: Analyze the major cost structure line items in the income statement (COGS, SG&A, restructuring costs, depreciation and amortization, impairment, interest expense (income), etc.) as percentages of net sales so that you can identify reasons for better net income margins. Identify and comment on the differences. You may not know why a particular cost item, such as COGS is higher or lower, and that’s okay. Your CEO only wants to know which cost-structure items are higher or lower for each company.

2. Debt Management

• Which company does a better job managing its long-term debt? • What are their respective 3-year trends (2021 to 2023) for total debt to total assets

ratio? • How can each company improve its use of long-term debt and equity capital?

3. Cash Is King • How much net cash from operations (CFFO) did each company generate in the most

recent year? • Which company has done a better job generating net cash from operations (CFFO)? • In layperson's terms, how is each company spending its cash with respect to

reinvestments in the business, changes in debt, and returning money to shareholders?

4. Short-Term Liquidity

• How do the companies compare in terms of the current ratio, and what are their respective 3-year trends?

• Do their current ratios indicate that either of these companies could go bankrupt soon? Explain.

JWI 530: Financial Management I Assignment 1B

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. This document is subject to change based on the needs of the class. JWI 530 – Assignment 1B (1244) Page 3 of 5

For your slides and video presentation, complete the following tasks:

1. Create a PowerPoint deck to support your financial presentation.

• Highlight your key findings from your Financial Analysis Snapshot (Assignment 1A) and your Executive Memo. Focus on the most critical insights that would be helpful for the leadership team. Your PowerPoint should complement your Financial Analysis Snapshot and your Executive Memo.

i. Assume your CEO will have access to the documents, so just hit the high points. ii. Keep your slides legible. Avoid tiny fonts, too much text, or distracting graphics. iii. Keep it brief, using a maximum of 5 slides for the four key topics outlined above

and a summary with your recommendation.

2. Record your financial presentation using ZOOM or PowerPoint

• Record both the PowerPoint deck and your webcam feed simultaneously.

• Practice your presentation. You may record as many times as you wish before submitting.

• Maintain eye contact, speak conversationally and professionally, use an engaging tone, and dress appropriately.

• Your video must be no longer than 5 minutes. Submission Requirements There are 3 submission files for assignment 1B:

1. Your Executive Memo should be no more than 2 pages, single-spaced, using 10- or 12-point font.

You may also include an appendix with additional references, graphs, charts, and tables for

additional support if needed.

2. Your Video Recording should not exceed 5 minutes in length.

3. Your PowerPoint Deck must not exceed 5 slides (not including the cover page or references, if

desired).

JWI 530: Financial Management I Assignment 1B

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. This document is subject to change based on the needs of the class. JWI 530 – Assignment 1B (1244) Page 4 of 5

RUBRIC ASSIGNMENT 1B

20% of Course Grade

Assignment 1B

CRITERIA Honors High Pass Pass Low Pass Unsatisfactory

1. Discuss the Profit Structure of Both Organizations’ Net Income Margins Weight: 20%

Meets HP criteria, plus includes additional insights and analyses demonstrating additional research and knowledge.

Excellent analysis of the profit structures of both organizations; has no critical omissions.

Satisfactorily identifies and assesses the profit structures of both organizations; contains minor omissions.

Partially identifies and assesses the profit structure of at least one organization.

Does not submit, or incorrectly identifies and assesses the profit structures of both organizations.

2. Assess Each Company’s use of Long-Term Debt and Debt- to-Equity Ratios Weight: 20%

Meets HP criteria, plus includes additional insights and analyses demonstrating additional research and knowledge.

Excellent assessment of both companies’ long-term debt/equity management methods and results; has no critical omissions.

Satisfactorily assesses both companies’ long-term debt/equity management methods and results; contains minor omissions.

Partially assesses at least one company’s long-term debt/equity management methods and results.

Does not submit, or incorrectly assesses both companies’ long-term debt/equity management methods and results.

3. Identify and Assess each Company’s Cash Flow Situation and Decisions Weight: 20%

Meets HP criteria, plus includes additional insights and analyses demonstrating additional research and knowledge.

Excellent identification and assessment of both companies’ cash flow situations and decisions; has no critical omissions.

Satisfactorily identified and assessed both companies’ cash flow situations and decisions; contains minor omissions.

Partially identifies and assesses at least one company’s cash flow situation and decisions.

Does not submit, or incorrectly identifies and assesses both companies’ cash flow situations and decisions.

4. Identify and Assess each Company’s Liquidity Status Weight: 20%

Meets HP criteria, plus includes additional insights and analyses demonstrating additional research and knowledge.

Excellent identification and assessment of both companies’ liquidity statuses; has no critical omissions.

Satisfactorily identifies and assesses both companies’ liquidity statuses; contains minor omissions.

Partially identifies and assesses at least one company’s liquidity status.

Does not submit, or incorrectly identifies and assesses both companies’ liquidity statuses.

JWI 530: Financial Management I Assignment 1B

© Strayer University. All Rights Reserved. This document contains Strayer University confidential and proprietary information and may not be copied, further distributed, or otherwise disclosed, in whole or in part, without the expressed written permission of Strayer University. This document is subject to change based on the needs of the class. JWI 530 – Assignment 1B (1244) Page 5 of 5

CRITERIA Honors High Pass Pass Low Pass Unsatisfactory

5. Demonstrate Professional Communication and Executive Presence Weight: 20%

Meets all HP criteria, plus infuses the delivery with a style and energy that exemplifies executive presence; demonstrates exceptionally strong and engaging interaction with support materials without allowing them to distract from the presentation.

Delivery and communicat- ion are excellent; written materials, timing, and content are well organized and clear; makes excellent choices of where to focus time and energy to cover the most critical elements.

Delivery and communicat- ion are good; makes eye contact; voice is dynamic; presenter uses appropriate verbal cues and wears professional attire; PPT deck, written work, and presentation material meet all submission requirements for content and length.

Delivery and communicat- ion meet minimum requirements but lack executive presence; PPT deck and written work meet basic submission requirements; presentation is on-topic, but poorly organized and/or makes minimal connections to key topics.

Does not submit, or submission is poorly written; PPT deck is missing or is not integrated into presentation; delivery is unfocused or off-topic.