Performance Evaluation
Assessment 3 Instructions:
Performance Evaluation
Write a 1-2 page executive summary, along with an appendix of supporting
information, in which you analyze an organization’s financial performance as
well as their level of risk for lending and make and present a
recommendation to help leadership make a loan decision.
Introduction
This portfolio work project will help you complete a thorough review of an
organization’s financial performance as well as their level of risk for lending.
Your recommendation will help leadership create a loan portfolio, and your
executive summary will clearly and concisely communicate your review to
others in the organization.
Scenario
You work for an organization that provides loans to businesses. You are
working with a client who is requesting a loan that will require a review of
financial and related performance documents. You have been asked to
review the documents and summarize your findings in a loan
recommendation for your management team.
You may apply this scenario to either Option 1 or Option 2, described in
Requirements below.
Your Role
You are a loan manager for a lending organization, and your responsibilities
include reviewing loan requests and providing recommendations in regard to
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whether the loan requests should be funded.
Requirements
Option 1:
Your client works for Ace Company. Assume Ace Company requested a $3
million 10-year loan to purchase production equipment and develop
accompanying software. Use the Ace Company Data document for this
option.
Option 2:
Use a firm or scenario of your choosing.
Before choosing a company, read the assessment thoroughly to ensure:
The company fits the assessment requirements.
You have access to the financial statements and related performance
documents needed to assess risk and make a loan recommendation.
You will need information for this year and last year.
You can distribute the financial statements and related performance
documents without disclosing confidential company information.
Loan Recommendation
To arrive at your recommendation, analyze the financial performance of the
requesting company and present it to your organization’s uppermanagement team. The management team will take your recommendation
into consideration as they finalize loan requests.
Analyze the company’s performance and performance trends. Include the
following in your analysis:
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1. Analyze the trend for accounts receivable collections.
a. Identify the trend.
b. Explain the relevance of the trend.
c. Determine if the trend is improving or getting worse.
2. Compare the company’s average inventory turnover to the industry
average inventory turnover rate. Note that the average industry turnover
rate for Ace Company is 10 times per year.
a. Consider whether the company’s average inventory turnover is
higher or lower than the industry average.
b. Explain whether a higher or lower average is better.
c. Determine whether the trend is improving or getting worse.
3. Evaluate the company’s short-term and long-term credit worthiness
based on financial performance and trend (comparing this year to last
year). Include in your evaluation:
a. Information about performance and trends.
b. Information about other relevant financial information you consider
important to the decision.
c. Your recommendation regarding whether the bank should grant the
loan based on the financial data.
Deliverable Format
The management team of your organization requests this information in the
form of a 1–2 page executive summary along with a title page, references
page, and appendix of supporting information. The executive summary must
highlight the key findings from your review and will provide your
recommendation and rationale. The appendix must include data used in your
analysis for others to review. Assume that this document is the only
communication in regard to your analysis and recommendation and that you
will not be with the team to explain anything as it deliberates. In other words,
the documentation you provide must be well organized and include
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information for the management team to clearly see your recommendation
and rationale.
Related company report standards:
The executive summary is a professional document and should
therefore follow the corresponding MBA Academic and Professional
Document Guidelines, including single-spaced paragraphs.
In addition to the executive summary, include:
A title page.
A references page.
Appendix with supporting materials. If you are using a firm or
scenario of your choosing, ensure faculty has sufficient information
to understand how you reached your recommendation.
At least two APA-formatted references.
Evaluation
By successfully completing this assessment, you will demonstrate your
proficiency in the following course competencies through corresponding
scoring guide criteria:
Competency 1: Explain how accounting concepts and practices impact
financial reporting.
Analyze the trend for the company’s accounts receivable
collections.
Compare the company’s average inventory turnover ratio to an
industry average.
Competency 2: Apply principles of accounting to assess financial
performance.
Evaluate the company’s short-term and long-term credit
worthiness.
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Competency 4: Communicate financial information with multiple
stakeholders.
Communicate accounting information clearly.
Faculty will use the scoring guide to review your recommendation as if they
were a member of your organization’s management team. Review the
scoring guide prior to developing and submitting your assessment.
ePortfolio
This portfolio work project demonstrates your competency in applying
knowledge and skills required of an MBA learner in the workplace. Include
this in your personal ePortfolio.
Note: Faculty may also use the Writing Feedback Tool to provide feedback
on your writing. In the tool, click the linked resources for helpful writing
information.
Use the scoring guide to understand how your assessment will be evaluated.
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