How to Read a Financial Report discussion, management homework help

How to Read a Financial Report discussion, management homework help

1. Download and read “How to Read a Financial Report” from http://lgdata.s3-website-us-east-1.amazonaws.com/docs/552/122696/Merrill_Lynch.pdf .
2. Before composing your written 200- 300 word summary response, conduct a ratio analysis and complete the one-page Excel spreadsheet to be included as an appendix with your initial discussion post:
1. Using Ratio Analysis to Interpret Company Financial Reports:
1. Locate comparative financial statements: Locate the most recent comparative annual financial reports for your company if publicly traded (or another publicly traded company).  Note that you will need the financial statements for the two most recent consecutive years (fiscal year or calendar year).  You can find annual reports for publicly traded companies at the U.S. Securities and Exchange Commission website: http://www.sec.gov/edgar.shtml .
2. Provide the direct URL address(es) as reference(s) for the financial statements cited in the written discussion post.
3. Download the Excel worksheet  Financial Ratio Analysis.xlsx.
2. Attachment to Initial Discussion Post – Financial Ratio Analysis Worksheet: Complete the Excel financial analysis worksheet template using the financial information from the company’s Balance Sheets, Income Statements, Statements of Retained Earnings, and Cash Flow Statements for the two most recent years.
1. Note that the F/U column represents the terms “favorable” and “unfavorable.”  These terms signify the change of a ratio from one year to the next.  Although organization trends are considered to be more valid when using information over a period of three to five years, reviewing ratio changes from one year to the next can still provide key information and possibly point out areas for further inquiry.  Also, ratios are used to compare one company’s performance to another’s, or even to an industry’s performance.
2. To identify the change differential from the prior year to current year in the ratios as F/U (i.e., Favorable or Unfavorable), use the following key:
   

   Current ratio	F ~ up	U ~ down
   Quick ratio	F ~ up	U ~ down
   Receivable turnover	F ~ up	U ~ down
   Days’ sales uncollected	F ~ up	F ~ down
   Inventory turnover	F ~ up	U ~ down
   Days’ inventory on hand	U ~ up	F ~ down
   Payables turnover	F ~ up	U ~ down
   Days’ payable	F ~ up	U ~ down
   Profit margin	F ~ up	U ~ down
   Asset turnover	F ~ up	U ~ down
   Return on assets	F ~ up	U ~ down
   Return on equity	F ~ up	U ~ down
   Debt to equity	U ~ up	F ~ down
   Interest coverage ratio	F ~ up	U ~ down
   Cash flow yield	F ~ up	U ~ down
   Cash flows to sales	F ~ up	U ~ down
   Cash flows to assets	F ~ up	U ~ down
   Free cash flow	F ~ up	U ~ down
   Price/earnings ratio	F ~ up	U ~ down
   Dividends yield	F ~ up	U ~ down

3. HR’s Need to Read: In one or two sentences, explain why it is important for HR professionals to be able to read a financial report and how they might use the information for HR purposes.
4. Interpret the Financial Ratio Analysis Findings:
1. Interpret Ratio Groups: Interpret the findings for each group of ratios: liquidity ratios, profitability ratios, long-term solvency ratios, cash flow adequacy ratios, and market strength ratios.
2. Interpret the Organization’s Financial Standing: Interpret the findings of the ratio analysis as a whole.  In other words, discuss the overall meaning and implications when considering the individual interpretations in Step 4.a.
3. Implications for HR: Based on the interpretations, what are the implications of your findings for HR?