Calculate the financial ratios needed to determine your chosen business’s current financial health
To prepare for your report in Project Two, you must calculate the financial ratios needed to determine your chosen business’s current financial health. Once you’ve calculated these ratios, you will use the results to analyze the business’s current financial position. This will help you make decisions about how to improve or maintain their financial health. Pay close attention to working capital management. If liquidity is an issue, think about how the company will meet its short-term obligations.
Directions
For the company you chose in the Module Two journal assignment, open the following documents:
The balance sheet, income statement, and cash flow statement from the most recent fiscal quarter (from Mergent Online)
The Ratios Most Recent Fiscal Qtr worksheet in the Project Two Financial Formulas workbook.
For example, if the most recent fiscal quarter available is the third quarter in 2022, you’ll compare those results to the same financial calculations from the third quarter in 2021.
Use the documents to calculate key financial ratios.
Then open the following documents:
The balance sheet, income statement, and cash flow statement from the same fiscal quarter one year ago
The Ratios Same Fiscal Qtr 1 Year Ago worksheet
Use the documents to calculate the same financial ratios. Finally, compare those ratios and analyze your results.
Specifically, you must address the following rubric criteria:
Financial Calculations. Calculate accurate financial formulas to assess the business’s current financial health. Specifically, calculate the following formulas using the Ratios Most Recent Fiscal Qtr and the Ratios Same Fiscal Qtr 1 Year Ago worksheets in the Project Two Financial Formulas workbook:
Working capital
Current ratio
Debt ratio
Earnings per share
Price/earnings ratio
Total asset turnover ratio
Financial leverage
Net profit margin
Return on assets
Return on equity
Fiscal Quarter Comparison. Summarize the differences between the following:
The results from your financial calculations of the most recent fiscal quarter
The results of the same financial calculations of the same fiscal quarter from one year ago
For example, if the most recent fiscal quarter available is the third quarter in 2022, you’ll compare those results to the same financial calculations from the third quarter in 2021.
Comparison Analysis. Explain what your calculations and comparison show about the business’s current financial health. Give examples to support your explanation for the following questions:
Do the results show the business is financially healthy or unhealthy? Which results indicate this?
What might be the causes of the business’s financial success or failure?
Is more information needed to determine the business’s financial health? If so, which pieces of information might still be needed?
Short-Term Financing. Explain how potential short-term financing sources could help the business raise funds needed to improve its financial health. Base your response on the business’s current financial information.
What to Submit
Your submission should be a 2- to 3 page Word document with 12-point Times New Roman font, double spacing, and one-inch margins. You must also submit the following:
The Ratios Most Recent Fiscal Qtr worksheet from the Project Two Financial Formulas workbook
The Ratios Same Fiscal Qtr1 Year Ago worksheet from the Project Two Financial Formulas workbook
The Excel files for your downloaded balance sheet, income statements, and cash flow statements from Mergent Online
Supporting Materials
The following resources can help you complete this milestone:
Video: Mergent Online: Public Company Financials (4:46)
Watch this video from the Shapiro Library to learn more about how to access and use Mergent Online. This video shows information on the As Reported Currency page within the Company Financials tab. For the purposes of this course, however, the best way to see financial data is to click Standardized beneath the Company Financials tab. This will allow you to access the Standardized Annual Balance Sheet.
Shapiro Library FAQ: How Do I Cite a Company Profile From Mergent Online?
Use this resource to help answer any questions you have about citing from Mergent Online.
Project Two Milestone Two Rubric
Criteria Exemplary Proficient Needs Improvement Not Evident Value
Financial Calculations N/A Calculates accurate financial formulas to assess the business’s current financial health (100%) Shows progress toward proficiency, but with errors or omissions; areas for improvement may include calculating more accurate financial formulas to assess the business’s current financial health (85%) Does not attempt criterion (0%) 21
Fiscal Quarter Comparison Exceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner (100%) Summarizes the differences between the results from the financial calculations of the most recent fiscal quarter and the results of the same financial calculations of the same fiscal quarter from one year ago (85%) Shows progress toward proficiency, but with errors or omissions; areas for improvement may include summarizing in more detail the differences between the results from the financial calculations of the most recent fiscal quarter and the results of the same financial calculations of the same fiscal quarter from one year ago (55%) Does not attempt criterion (0%) 21
Comparison Analysis Exceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner (100%) Explains what the calculations and the comparison show about the business’s current financial health, giving examples to support the explanation (85%) Shows progress toward proficiency, but with errors or omissions; areas for improvement may include explaining in more detail what the calculations and the comparison show about the business’s current financial health or giving examples to support the explanation (55%) Does not attempt criterion (0%) 22
Short-Term Financing Exceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner (100%) Explains how potential short-term financing sources could help the business raise funds needed to improve its financial health, based on the business’s current financial information (85%) Shows progress toward proficiency, but with errors or omissions; areas for improvement may include explaining in more detail how potential short-term financing sources could help the business raise funds needed to improve its financial health, based on the business’s current financial information (55%) Does not attempt criterion (0%) 21
Articulation of Response Exceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner (100%) Clearly conveys meaning with correct grammar, sentence structure, and spelling, demonstrating an understanding of audience and purpose (85%) Shows progress toward proficiency, but with errors in grammar, sentence structure, and spelling, negatively impacting readability (55%) Submission has critical errors in grammar, sentence structure, and spelling, preventing understanding of ideas (0%) 10
Citations and Attributions Uses citations for ideas requiring attribution, with few or no minor errors (100%) Uses citations for ideas requiring attribution, with consistent minor errors (85%) Uses citations for ideas requiring attribution, with major errors (55%) Does not use citations for ideas requiring attribution (0%) 5
Total: 100%
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