Financial Analysis A company’s strengths and weaknesses are better understood by their financial statements such as Income Statement, Cash Flow statement, and Balance sheet. As Financial consultants, our goal is to help CanGo understand their financial statements and where CanGo needs to improve to gain the competitive edge in the market. Every company needs to understand their own financials before analyzing the market or industry. After analyzing CanGo’s efficiency ratios, we found them to be very un-attractive for investors. For example, CanGo has a very high receivables turnover rate.
Assignment 1: Economic Basics (24.0 points) 1. Describe two examples of important things that financial planning skills can help you do, and explain why these things are important to you personally. (4-6 sentences. 2.0 points) Financial planning skills can help you acquire more in term of finance and can also help you secure what you have. When you have skill to plan, you are aware of how to manage your account hence adding on your profit.
Current ratios show relative amount of working capital, while quick ratios show the amount of quick assets by current liabilities. “Ratio analysis is an important and powerful technique or method, general, used for financial analysis. The purpose of financial analysis is to diagnose the information content in financial statements so as to judge the profitability, financial soundness of the firm, and chalk out the way to improve existing performance.” (Ramagopal, 2008) Duke Energy’s Current ratio is 3.54; this is calculated by current assets, 2,049 million, divided by current liabilities, 578 million. There is no current problem with the liquidity in this company. The quick ratio is .33 and this is calculated by cash and accounts receivable, 1,501,000+ 1,316,000 divided by current liabilities, 8,644,000.
True (f) The objective of financial reporting is the foundation from which the other aspects of the framework logically result. True E2-4 Instructions Identify the appropriate qualitative characteristic(s) to be used given the information provided below. (a) Qualitative characteristic being employed when companies in the same industry are using the same accounting principles. Comparability (b) Quality of information that confirms users’ earlier expectations. Confirmatory value (c) Imperative for providing comparisons of a company from period to period.
Pro forma financial information is generally used to illustrate the effects of transactions such as business combination, and change in capitalization. There are countless reasons on why companies use pro forma statement in their business, the most significant is the planning and control received when using pro forma. The process of using pro forma statements are less time consuming, they help businesses evaluate and make a better distinction between business plans (Scarborough, Wilson, & Zimmerer, 2009, p. 196). Pro forma statements are an excellent outlet for resources that will help a business forecast expected earnings should the company chose to merge with another company or even if the company wanted to sell off part of it operations (Scarborough, Wilson, & Zimmerer, 2009, p. 196). The pro forma statements are commonly used when applying for a business loan.
The conceptual framework is a dominate form of normative accounting theory and Godfrey, et. al (2006, p. 412) dictate a conceptual framework in the context of financial accounting as “a definitive statement of the nature and purpose of financial accounting and reporting and which provides guidance for all accounting practice”. The Financial Accounting Standards Boards believes a conceptual framework to be integral as it adds a level of rigor and discipline that will result in more consistency in final statements and general modes of practice (The Financial Accounting Standards Board (2001). The primary function of this framework is to provide agreed standards, to remove the ambiguity and personalisation of the decision making process. Hence a conceptual framework is a firm example of normative accounting theory as it is prescriptive, detailing how practices should
Businesses in need of funds can easily discover which financial institutions or which financial markets may provide funding and what the cost will be for the borrower. This allows the businesses to compare the cost of financing to their expected return on investment, thus making the investment choice that best suits their needs 3) Ways the US financial Market impact the individual: Individual are the participant or investor of the financial Market. Individual need is to get best return on their investment for minimum cost. To borrow money from the financial market individual have to make his mind for the risk issues but efficient financial markets facilitate lower search and transactions cost to the individuals as market provide them a list of financial products with varying risk and pricing structures as well as maturity. Individuals in need of funds can easily discover which financial institutions or which financial markets may provide funding and what the cost will be for the borrower.
Risk Factors of Bloomingdales Risk factors play a major role in today’s economy. Since we are stuck in the stagnation period and do not seem to be recovering for quite some time, businesses have to come up with a proper marketing plan that will help sell their products. All businesses suffer from the same risk factors. Some common risk factors include: product quality, price, brand loyalty, competition, managerial skills, etc. Many customers are shopping at lower priced stores because the economy is not allowing them to spend extra money.
Balance Sheet 1) Similarities Both Companies uses the narrative format for balance sheet instead of the T-Format. This form, assets are first, followed by liabilities and then owner’s equity, this allows users to compare and identify the progress or the company between the financial positions of the previous and current period. Both balance sheets figures are presented in millions. Both balance sheets share very similar elements as well as the items within their assets, liabilities and equities. The reason could be that both Nestle and Unilever prepared the balance sheet in compliance of IFRS and they are from the same industry.
Structure: Deutsche bank, being a very old bank that has evolved has seen a change in their structure many times throughout their history. In order to evolve and globalize their change in structure has made them current with modern day society and a stronger force amongst their competitors. Deutsche bank diversifies its activities into three group divisions: Corporate & Investment Bank (CIB); Private Clients and Asset Management (PCAM), and Corporate Investments (CI). Group divisions: Deutsche bank has compartmentalized their banks to be able to monitor business and performance more closely, when globalizing, Deutsche Bank headquarters realized that it would be nearly impossible to monitor all these new deutsche bank locations; they sought out to create a structure that can be implemented in each deutsche bank location. Deutsche bank is diversified into three group divisions, which are Corporate and investment banking, Private clients and Asset Management, and Corporate investments.