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# Ashford 6: – Week 5

Discussions
To participate in the following discussions, go to this week’s Discussion link in the left navigation.

1. Ratios

Ratios provide the users of financial statements with a great deal of
information about the entity. Do ratios tell the whole story?
How could liquidity ratios be used by investors to determine whether or
not to invest in a company?

Guided Response:
Let at least two of your peers know how debt service ratios can be used by
a lender in determining whether or not to lend money to a company.

2. Profit Margin
 Year Ending December 2012 Year Ending December 2011 Year Ending December 2010 Revenues 40,000 35,000 33,000 Operating Expenses Salaries 15,000 10,000 9,000 Maintenance and Repairs 6,000 9,000 10,000 Rental Expense 2,500 2,500 2,500 Depreciation 2,000 2,000 2,000 Fuel 4,000 3,500 2,500 Total Operating Expenses 29,500 27,000 26,000 Operating Income 10,500 8,000 7,000 Sales and Administrative Expenses 6,000 4,000 3,000 Interest Expense 2,500 2,000 1,000 Net Income 2,000 2,000 3,000

Above is a comparative income statement for Cecil, Inc. for
the years 2010, 2011, and 2012. Calculate the profit margin for each of
these years. Comment on the profit margin trend.

Guided Response:
Let at least two of your peers posts know what you changes you would recommend
to improve the net margin of the company.

Exercise Assignment
To complete the following assignment, go to this week’s Assignment link in the left navigation.

Financial Ratios

Please complete each of the exercises below in a word document. Save the
document, and submit to in week using the Assignment Submission
button.

.next.ecollege.com/pub/content/f43dbe39-2059-4a00-9fea-369a8541e3f6/Week_Five_Exercise_Assignment.docx”>Week Five Exercise Assignment

Carefully review the .waypointoutcomes.com/assessment/2868/preview”>Grading Rubric for
the criteria that will be used to evaluate your assignment.

Final Paper
To complete the following final paper, go to this week’s Final Paper link in the left navigation.

Final Paper

Focus
of the Final Paper

Write a five-to seven-page financial
statement analysis of a public company, and formatted according to APA style as
outlined in the Ashford Writing Center. In this analysis you will
discuss the financial health of this company with the ultimate goal of making a
recommendation to other investors. Your paper should consist of the
following sections: introduction, company overview, horizontal analysis, ratio
analysis, final recommendation, and conclusions. Your paper needs to
include a minimum of two scholarly resources in addition to the textbook as
references.

Here is a breakdown of the sections within the body of the assignment:

Company
Overview

Provide a brief overview of your company (one to two paragraphs at
most). What industry is it in? What are its main
products or services? Who are its competitors?

Horizontal
Analysis of Income Statement and Balance Sheet

Prepare a three-year horizontal analysis of the income statement and balance
sheet of your selected company. Discuss the importance and meaning of
horizontal analysis. Discuss both the positive and negative trends

Ratio
Analysis

Calculate the current ratio, quick ratio, cash to current liabilities ratio,
over a two-year period. Discuss and interpret the ratios that you
calculated. Discuss potential liquidity issues based on your calculations
of the current and quick ratios. Are there any factors that could be
erroneously influencing the results of the ratios? Discuss liquidity
issues of competitive companies within the same industry.

Recommendation
Based on your analysis would you recommend an individual invest in this company?
What strengths do you see? What risks do you see? It is perfectly
acceptable to state that you would recommend avoiding this company as long as
you provide support for your position.

Writing
the Final Paper

1. Must be five to
seven double-spaced pages in length, and formatted according to APA style as
outlined in the Ashford Writing Center.
2. Must include a title page with the following:

a. Title of paper
b. Studentâ€™s name
c. Course name and number
d. Instructorâ€™s name
e. Date submitted

3. Must begin with an introductory
paragraph that has a succinct thesis statement.
4. Must address the topic of the paper with critical thought.
5. Must end with a conclusion that reaffirms your thesis.
6. Must document all sources in APA style, as outlined in the
Ashford Writing Center.
7. Must include a separate reference page, formatted according
to APA style as outlined in the Ashford Writing Center.

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