Why is time value analysis considered superior to methods that do not consider time value? Why might a company lease equipment rather than purchase it? What are some non-financial considerations that may be made when making capital investment decisions?
Company Analysis
Google Nike Company's statements for inventory and receivables for the following project. Visit their web site, on their home page find; Investor Relations, Annual Report (the most current), Financial Statements, Consolidated Income Statement, Consolidated Balance Sheet and Consolidated Cash Flow Statement. The three sources (Income Statement, Balance Sheet and Cash Flow Statement) from you company’s web site must be used to complete the following.
The paper can be completed on either Excel or Word. If you use Excel, be observant to the print areas, (example sentences should fit in the proper page). If you have any questions contact the instructor for clarification.
Total Value = 100 Points
Due before the start class of Week 6.
Introduction
i. Short introduction explaining the industry of your company, brief history of the company and the product/service of your company. The introduction can be concise and written in two paragraphs.
Liquidity
i. Calculate the current ratio and quick ratio for two years (show your work).
ii. Comment on the trend of your ratios.
iii. Explain why a bank loan officer will have a higher regard for the quick ratio when understanding the liquidity of a company.
Activity ratios
i. Calculate the days inventory on hand for two years (show your work).
ii. Calculate the days to collect AR.
iii. Comment on the trend of your ratios.
iv. Explain how improving the day’s inventory on hand will affect the financial impact for the company.
v. Prepare a graph comparing the Days Inventory on Hand and Days to Collect AR (use headings and data labels).
Profit ratios
i. Calculate the gross profit margin for three years (show your work).
ii. Prepare a graph for the gross profit margin, comparing each year (use headings and data labels).
iii. Explain the meaning of this ratio and how management will use this ratio to identify strengths and weaknesses for the company.
iv. Give a specific idea that you would recommend to the company which will improve the gross profit margin for the company.
v. Calculate Net Sales to PPE ratio for two year (show your work).
vi. Explain the meaning of this ratio and how management can use this information to help improve the efficiency of the company.
Horizontal analysis
i. Complete a horizontal analysis on the following; Net Sales, Gross Profit, Operating Income (report as a percent with one decimal place).
ii. Comment on the strengths and weaknesses, of the company, that is highlighted by your horizontal analysis.
Vertical analysis
i. Complete a vertical analysis on the following; CGS, Operating Expenses and Net Income for three years.
ii. Comment on the strengths and weakness, of the company, that is highlighted by your vertical analysis.
iii. Graph your data into a presentable format to help explain your comments, requires a heading and data labels
Overview
i. You are the new CEO at the company and the controller has submitted your analysis to the Board of Directors. Name two items that you would address immediately which will improve the financial results of the company – be specific.
Review the Cash Flow Statement for the company. You are planning to interview for a top management position at the company next week. Based on the operating, investing and financing sections develop three questions that you would ask during an interview.