Overview
Businesses and other organizations must regularly measure their financial performance and health in order to make operational and strategic decisions affecting
the organization’s future. Management professionals utilize income statements, balance sheets, cash flow statements, and a limitless variety of other reports and
techniques to evaluate an organization. They also work closely with professionals from departments across the organization—including marketing, human
resources, and operations—to ensure that the business runs smoothly and that financial decisions are not made in isolation.
For this project, you will use the accounting and finance skills you learned in the course to review the past and current financial performance and health of a
global, publicly traded company. Based on that analysis, you will create initial financial projections that forecast the company’s performance under different
scenarios and identify internal risks and opportunities in order to begin planning future activities.
This assessment addresses the following course outcomes:
Assess organizations’ underlying financial performance and health by analyzing relevant financial statements, variances, ratios, and other financial
information
Draw connections between accounting and financial information and the broader organizational context for making integrated business decisions
Assess critical factors driving financial risks and opportunities for informing management priorities
Forecast business performance under different assumptions about inputs and processes using simple financial models
Evaluate the internal costs and benefits of business opportunities for their impact on budgeting and business decisions
Communicate financial analyses clearly and coherently for persuading internal stakeholders of the validity of observations and conclusions
Prompt
Imagine you are a newly hired manager at a publicly traded, global corporation of your choosing. (Your instructor must approve your choice. You may also choose
a non-publicly traded organization, if your instructor verifies that the organization has sufficient financial information available to complete the project.)
You have been asked to review the company’s past and current financial performance and health and make initial financial projections in order to begin planning
for the upcoming year. Your supervisor is particularly interested in a fresh perspective on what your analysis reveals about potential risks and opportunities, as
well as recommendations for next steps. Because you will eventually need to convince internal stakeholders, including senior management, of the feasibility and
desirability of your suggested activities, it is important that you justify your projections and recommendations, explaining how they were informed by existing
information and modeling different scenarios.
Your financial analysis and projection report will include several financial tables, along with a comprehensive narrative describing the organization’s context,
financial performance and health, and your analytical approach and conclusions. Your report should be geared toward an executive audience with basic
accounting and finance knowledge and should be well organized, clear, concise, convincing, and free of distracting errors. Note that, in addition to theorganization’s financial statements and website, other authoritative news sources—such as annual reports and external sites like Bloomberg.com—may offer
insights that facilitate analysis or provide information on the organization’s priorities, challenges, and geographic distribution.
Specifically, your financial analysis and projection report must include the following critical elements:
I. Executive Summary. Clearly and concisely summarize your principal findings, projections, and recommendations with an eye to persuading busy executives
to support your ideas and to read further. [MBA-520-06]
II. Approach. Provide your intended audience with a solid, but brief, sense of the parameters of your analysis and who else you would consult in refining it
further and why. Remember, your goal is to convince readers of the validity of your observations, while recognizing limitations that affect business
decisions. [MBA-520-06]
III. Financial Performance and Health. In this section, you will evaluate the organization’s recent financial performance and current financial health, given its
organizational context. In particular, you must cover:
A. Organizational Context
1. What key features of the organization (e.g., major products or services, customers, location, etc.) help set the boundaries for business
decisions? In other words, what key goods or services does your organization provide, for whom, where, and why? [MBA-520-02]
2. How is the company organized and managed (e.g., by product groups, geographic region, function, etc.)? How does that affect
accounting and financial information and subsequent business decisions? [MBA-520-02]
B. Recent Financial Performance
1. Assess what the organization’s consolidated income statements for the last three years say about its financial performance. Use relevant
indicators, graphs, and spreadsheets to support your narrative. (Include all spreadsheets in an appendix.) For example, what do the
amounts and year-to-year changes in revenue, operating income, net profit or loss, and Earnings Before Interest, Taxes, Depreciation,
and Amortization tell you? Do any items stand out? [MBA-520-01]
2. Assess what the organization’s consolidated cash flow statements for the same time period say about its financial performance. Use
relevant indicators, graphs, and spreadsheets to support your narrative. For example, what do the amounts and year-to-year changes in
cash from operating activities, cash from investing, cash from financing, and total cash flow tell you? Do any items stand out? [MBA-520-
01]
3. Assess the organization’s underlying financial performance. Support your answer with the analysis above and relevant research. For
example, is recent performance substantially affected by unusual events such as a major acquisition or spin-off? Is the business thriving
or struggling in its industry? How do you know? [MBA-520-01]
C. Current Financial Health
1. Assess how the organization is capitalized and what that tells you about its financial health. Support your response with relevant graphs,
spreadsheets, and indicators such as “cash and cash equivalents,” total debt, shareholders’ equity, current ratio, debt/equity ratio, and
Days Sales Outstanding (DSO). For example, does the organization have enough cash for payroll and other bills? Does it have the right mix
of debt versus equity (stock)? How do you know? [MBA-520-01]2. Does the organization have the right amount of cash and other resources (e.g., key people, technologies, reputation, physical assets, etc.)
to fuel future growth? What does this suggest for business decisions? For example, if it has too much cash, should it pay a large dividend,
repurchase its own shares, or reinvest the excess funds? [MBA-520-02]
3. Assess the financial value of the company using relevant indicators. What does your assessment imply for future business health and
performance? For example, what is the business’s current market value? What is its price-to-earnings ratio? What do these suggest
about investor perceptions of the business’s future? [MBA-520-01]
IV. Success Factors and Risks. Use this section to discuss the factors that may affect current and future performance. Specifically:
A. How do the organization’s financial and strategic priorities affect accounting procedures and business decisions? How might that affect business
success? For example, is management growth-oriented or efficiency-oriented? What is the organization’s approach to risk and short- versus longterm planning horizons? [MBA-520-03]
B. How might the organization better capitalize on non-financial factors such as market share, reputation, human resources, physical facilities, or
patents? Support your response with relevant research and analysis. [MBA-520-03]
C. What are the most significant internal risks to the company’s financial performance? Give evidence to support your response. For example, is the
company vulnerable to technological changes or cyber-attacks? Loss of high-talent personnel? Production disruptions? [MBA-520-03]
V. Projections. Based on what you know about the organization’s financial health and performance, forecast its future performance. In particular, you
should:
A. Project the organization’s likely consolidated financial performance for each of the next three years. Support your analysis with an appendix
spreadsheet showing actual results for the most recent year, along with your projections and assumptions. Remember, your supervisor is
interested in fresh perspectives, so you should not just replicate existing financial statements, but should add other relevant calculations or
disaggregations to help inform decisions. [MBA-520-04]
B. Modify your projections for the coming year to show a best- and worst-case scenario, based on the potential success factors and risks you
identified. As with your initial projections, support your analysis with an appendix spreadsheet, specifying your assumptions and including
relevant calculations and disaggregations beyond those in existing financial reports. [MBA-520-04]
C. Discuss how your assumptions, forecasting methodology, and information gaps affect your projections. Why are your projections appropriate?
For example, are they consistent with the organization’s mission and priorities? Aggressive but achievable? How would changing your
assumptions change your projections? [MBA-520-04]
VI. Business opportunities. In this section, discuss the incremental impact of a hypothetical, but reasonable, simple new investment project, such as a new
product or facility or a cost-cutting investment, as an initial step in thinking about the future. Be sure to address the following:
A. Based on your knowledge of this organization, what is a likely investment it would consider and why? Be sure to describe the basic features of
the investment as a foundation for considering its potential financial impact. [MBA-520-05]
B. Evaluate the approximate costs and benefits of the investment you identified, explaining how these would affect your spreadsheet projections
and business decisions. Estimates are sufficient, but should be grounded in common sense and insight into the organization. [MBA-520-05]C. How does the potential investment affect budgeting and related business decisions? For example, does the investment involve significant cash
spending this coming year, followed by benefits in the following year? How might that affect short-term and long-term spending priorities? Does
the benefit outweigh the cost? [MBA-520-05]
VII. Recommendations. What should you and your manager do next? Support your recommendations with evidence from your financial analysis. For
example, should the company pursue the new investment you identified? Implement process changes to decrease risks and/or improve performance?
[MBA-520-06]
Milestones
Milestone One: Financial Performance and Health
In Module Three, you will submit your first milestone in which you will evaluate the organization’s recent financial performance and current financial health,
given its organizational context. This milestone will be graded with the Milestone One Rubric.
Milestone Two: Success Factors, Risk, and Projections
In Module Five, you will discuss factors that may affect current and future performance. You will then forecast future performance, based on what you know
about the organization’s financial health and performance. This milestone will be graded with the Milestone Two Rubric.
Milestone Three: Business Opportunities
In Module Seven, you will discuss the incremental impact of a hypothetical, but reasonable, simple new investment project, such as a new product or facility or a
cost-cutting investment, as an initial step in thinking about the future. This milestone will be graded with the Milestone Three