Assignment 3: Understanding the Numbers for Better Decisions
It is the management’s responsibility to maximize shareholder wealth as it is based on the organization's future cash flows. To accomplish this, managers have to understand how to use financial statements for analysis.
In this assignment, you will explain the importance of the statements to the financial reporting process and management decisions.
Tasks:
- Locate the financial statements of a U.S. publicly-traded company of your choice (the company must have inventory and accounts receivable) by visiting the organization's Web site to locate the investor section. Or you may use one of the following Websites:
- Review the information presented in the financial statements of the company you selected.
- Using the company you selected, calculate one ratio from each ratio category located at this Financial Ratios resource. Complete a trend analysis of each ratio for a three-year period.
- Describe what the trends you see for your company based on your ratio analysis. What does this mean for the company?
- Compare your company’s ratios with those of the industry it is in.
- Analyze the financial reporting information and the financial health of the company with the help of the calculated ratios.
