FINANCIAL REPORT MEMO 0 Mohamad, Thank you very much for the submission, but just as I pointed on your last submission, you did not quite pay attention to my recommendations or the rubric. I am unable to unlock a third attempt unless you can prove to me that you can follow the simple instructions I have outlined on the messages I sent you before your first submission, on my feedback to your first submission and now on this one as well. I am copying your academic coach so that she is aware of my feedback to you. This was the message: Have you studied my announcements, assessment instructions, and rubric? It is imperative for you to understand the use of good academic writing (visit the Walden Writing Center), use of online library for academic resources (not internet sources), SEC.gov for financial filings (not annual reports from a company’s website), and most importantly, your job is to do vetting of anything companies claim on their websites. When you provide explanations, you must ONLY use academic resources. The use of Wikipedia, Investopedia, Financial related websites, blogs, etc. is not appropriate for this competency. Would you ever cite https://theflatearthsociety.org/home/? I doubt it! Why would you cite any other website not of an academic nature? Industry averages It is a good idea to get familiar with each industry's classification! A good place to start is to look for the North American Industry Classification System (NAICS) and research for the industry of you chosen company through https://www.census.gov/eos/www/naics/. Please notice how it is a US Government website, not a “.com”. At the MBA level you need to prevent going to just any website for information as the information may not be accurate and there is no way to validate it. Then, visit the Walden Library and access the IBIS World database in order to look for industry standards: https://ezp.waldenulibrary.org/login?url=https://clients1.ibisworld.com. Be ready for a bit FINANCIAL REPORT MEMO 1 of confusion because the language may not be as clear as the textbook. For example, you may see Accounts Payable in one place and Debt to Pay in another. That means that you need to know the definitions well and how exactly ratios are calculated in order to understand any financial statement from different sources. It is important for you to use proper academic writing and cite where your suggestions come from. In addition, what I see in this attempt is that you do not use the Excel sheet for computations as you need to use the formulas function, you do not present the financial from the SEC.gov, you do not use the IBIS World database to obtain the true industry averages, and when you report that a ratio is above or below standards you do not present ways in which the company can improve or maintain the ratios. Looking at the rubric, the following is NOT achieved: • Rationales are furnished for ratios selected as being above/below industry average but are weak or they are not provided. • Determination of specific ways for a company to improve financial performance over time is missing. • Presentation of rationales as to why recommendations for improvement in financial ratio performance will be effective is missing. • Identification of salient limitations of use of ratio analysis is missing. • Assessment of qualitative factors that may play important roles in improving financial performance to complement ratio analysis is missing. • Writing is loosely organized. Limited use of introductions, transitions, and conclusions provides partial continuity. • APA conventions for attribution of sources, structure, formatting, etc., are applied inconsistently. • Excel spreadsheet has some formatting issues and is difficult to interpret. • Response is weak in assessing the reasonableness of assumptions in a given argument. • Response does not adequately identify and discuss the implications of fallacies or logical weaknesses in a given argument. • Assumptions are missing. • Assessment of multiple perspectives is missing. • Problems and solutions are not identified. I recommend that you visit the writing center and that you adhere to the rubrics and MY recommendations. If you have any questions or concerns, please do not hesitate to contact me. FINANCIAL REPORT MEMO 2 Thank you, Dr. Roldan FINANCIAL REPORT MEMO OF WALMART HAL [COMPANY NAME] [Company address] FINANCIAL REPORT MEMO 3 Financial Report Memo of Walmart Mohamad Abou Hammoud Walden University 09-04-2019 FINANCIAL REPORT MEMO 4 To: Supervisor From: Financial Analyst Date: 9th April 2019 Subject: Financial Report Memo of Walmart Through the present memo, I wish to point out the major conclusions derived from the analysis of the current financial health of the company. The requested study involved the estimation of several financial ratios, commonly used to assess the company's profitability, liquidity, solvency, and efficiency, among others, based on the latest company’s financial results (Walmart, 2019). Specifically, the financial ratios calculated in the Excel file attached to the present memo were the current ratio, the total debt to total assets ratio, the times interest earned, the EBITDA coverage ratio, the inventory turnover ratio, the days sales outstanding, the fixed assets turnover ratio, the total assets turnover ratio, the profit margin, the return on total assets ratio, and the return on common equity ratio. The analysis involved not only the evaluation of the financial ratios of the company but also the comparison to the industry average. This comparison enables us to assess whether the company has poor or good performance concerning the industry, thus identifying the areas in which the company should improve its financial health in the future. The calculated current ratio, of 0.760, is outstandingly low considering that the industry average has a current ratio of approximately 2. This small current ratio indicates that the company does not have enough current assets with which to pay the most urgent liabilities should there be a dramatic decrease in the sales revenue. In this sense, please note that the company is facing a high risk of not having access to enough liquidity and running short on the available cash to sustain its operation in the short run. While the company is in principle big FINANCIAL REPORT MEMO 5 enough as to not have to face such a dramatic decrease in the sales revenue, I have considered pointing this out from the beginning of the analysis, as I believe it to be the most critical issue faced by the company at the moment. Other areas in which the company is currently lagging behind the industry average are the EBITDA coverage, the fixed assets turnover ratio, the total assets turnover ratio, and the profit margin. The EBITDA coverage ratio once more suggests a solvency issue in the company, as it is not capable of generating as much income as it should according to the interest expenses paid. The fixed and total assets turnover ratios, on the other hand, point towards the inefficient utilization of the company's fixed and total assets in the generation of revenue. Lastly, the reduced profit margin as compared to that of the industry average suggests low profitability, which likely results from the excessive expenses paid by the company that may somewhat hamper the outstandingly high sales revenue recorded every year. There are however areas in which the company outperforms the industry average. For example, the two most noteworthy areas are the calculated days' sales outstanding and the total debt to total assets ratio. The computed days' sales outstanding, of solely 4.1 days, indicates that the company is highly efficient in collecting the existing receivables, which may result from the fact that most of the customers pay their purchases directly with cash or a debit card that enables the company to collect the revenue from the sale immediately. On the other hand, the total debt to total assets ratio indicates that the company has a low debt in comparison to the existing assets. The little value of the total debt to total assets ratio implies that the company has enough assets available with which to cover up the debt obligations, even if these assets seem to be mainly inaccessible or require from a long term for the company to convert them into cash or cash equivalents. FINANCIAL REPORT MEMO 6 Please note that the analysis carried out has exclusively based on the evaluation of the financial ratios, obtained from the comparison of specific entries in the income and balance sheet statements of the company. While this analysis represents a simple approach with which to compare the company to the industry average, it does not account for some of the most critical financial strengths of the company. For example, the analysis exclusively based on the evaluation of the financial ratios fails to reflect how the company has the highest revenue in the wholesale retailer industry, being 3.5 and 6.6 times higher than the revenue raised by the company two most essential competitors: the CostCo Wholesale Corporation and the Target Corporation. From the above, a full detailed analysis of the financial health of the company would need to account for other factors, such as the market share, the company’s employees, and whether the company’s financial health is improving or deteriorating over time as compared to that of the industry. This full analysis would enable us to have a more comprehensive point of view of the actual financial health of the company and how it compares to that of our competitors, assisting in the identification of both potential weaknesses and strengths of Walmart compared to the CostCo Wholesale Corporation and the Target Corporation. The company may attempt to improve the current situation by increasing the current assets and reducing its short-term debt. Possible targets for the future three years that should assist in normalizing the most deficient areas would be to increase the current assets by 10%, decrease the short term debt by 5%, and decrease the operational expenses by 15%. FINANCIAL REPORT MEMO 7 References CostCo. (2019). 2018 Annual Report. Retrieved from http://investor.costco.com/Mobile.view?c=83830&d=10&v=100 Target. (2018). 2017 Annual Report. Retrieved from https://corporate.target.com/annualreports/2017 Walmart Inc. (2019). 2018 Annual Report. Retrieved from https://stock.walmart.com/investors/financial-information/annual-reports-andproxies/default.aspx Running head: FINANCIAL REPORT MEMO Financial Report Memo: Walmart Name Course Date 1 FINANCIAL REPORT MEMO 2 To: (Supervisor’s name) From: (Name) Subject: Financial Report Memo: Walmart Introduction Through the present memo, I wish to point out the major conclusions derived from the analysis of the current financial health of the company. The requested study involved the estimation of several financial ratios, commonly used to assess the company's profitability, liquidity, solvency, and efficiency, among others, based on the latest company’s financial results (SEC, 2019b). The analysis involved not only the evaluation of the financial ratios of the company but also the comparison to the industry average. This comparison enables us to assess whether the company has poor or good performance concerning the industry, thus identifying the areas in which the company should improve its financial health in the future. Analysis The calculated current ratio, of 0.799, is outstandingly low considering that the industry average has a current ratio of approximately 1.9 (IBISworld, 2019). This small current ratio indicates that the company does not have enough current assets with which to pay the most urgent liabilities should there be a dramatic decrease in the sales revenue. In this sense, please note that the company is facing a high risk of not having access to enough liquidity and running short on the available cash to sustain its operation in the short run. While the company is in principle big enough as to not have to face such a dramatic decrease in the sales revenue, I have considered pointing this out from the beginning of the analysis, as I believe it to be the most critical issue faced by the company at the moment. The company may attempt to improve the FINANCIAL REPORT MEMO 3 current situation by increasing the current assets and reducing its short-term debt. Possible targets for the future three years that should assist in normalizing the most deficient areas would be to increase the current assets by 10% and decrease the short-term debt by 5%, which would result in a notable increase of the current ratio. Other areas in which the company is currently lagging behind the industry average are the fixed assets turnover ratio, the total assets turnover ratio, and the profit margin. The low fixed and total assets turnover ratios point towards the inefficient utilization of the company's fixed and total assets in the generation of revenue. Considering how the significant difference appears in the utilization of the fixed assets of the company as compared to the industry average, it would be advisable that Walmart improved the use of its fixed assets to generate a higher revenue of sales (Christopher, 2016). One possible way to accomplish this is to reconsider the logistics distribution chain of the company and optimize the inventory management system. Alternatively, the company could evaluate the utilization of its different fixed assets and sell those fixed assets that present the lowest return on sales (Christopher, 2016). Lastly, the reduced profit margin as compared to that of the industry average suggests low profitability, which likely results from the excessive expenses paid by the company that may somewhat hamper the outstandingly high sales revenue recorded every year. There are however areas in which the company outperforms the industry average. For example, the two most noteworthy areas are the calculated days' sales outstanding and the total debt to total assets ratio. The computed days' sales outstanding, of solely 4.1 days, indicates that the company is highly efficient in collecting the existing receivables, which may result from the fact that most of the customers pay their purchases directly with cash or a debit card that enables the company to collect the revenue from the sale immediately. On the other hand, the total debt FINANCIAL REPORT MEMO 4 to total assets ratio indicates that the company has a low debt in comparison to the existing assets. The little value of the total debt to total assets ratio implies that the company has enough assets available with which to cover up the debt obligations, even if these assets seem to be mainly inaccessible or require from a long term for the company to convert them into cash or cash equivalents. Please note that the analysis carried out has exclusively based on the evaluation of the financial ratios, obtained from the comparison of specific entries in the income and balance sheet statements of the company. While this analysis represents a simple approach with which to compare the company to the industry average, the use of financial ratios as the exclusive method of analysis presents several salient limitations. For instance, it does not account for some of the most critical financial strengths of the company (Lesakova, 2007). For example, the analysis exclusively based on the evaluation of the financial ratios fails to reflect how the company has the highest revenue in the wholesale retailer industry, being 3.5 and 6.6 times higher than the revenue raised by the company two most essential competitors: the CostCo Wholesale Corporation (SEC, 2019a) and the Target Corporation (SEC, 2018). Financial ratio analysis also fails to evaluate the contribution of other critical qualitative factors affecting the company's performance such as the sales per employee, the market share, and the number of employees. A full detailed analysis of the financial health of the company would need to account for other factors, such as the market share, the company’s employees, and whether the company’s financial health is improving or deteriorating over time as compared to that of the industry. This full analysis would enable us to have a more comprehensive point of view of the actual financial health of the company and how it compares to that of our competitors, assisting in the FINANCIAL REPORT MEMO 5 identification of both potential weaknesses and strengths of Walmart compared to the CostCo Wholesale Corporation (SEC, 2019a) and the Target Corporation (SEC, 2018). Conclusion and recommendations As stated previously, the company should work at improving its current ratio, fixed assets ratio, total assets turnover ratio, and profit margin. While accounting for the limitations of financial ratio analysis in the managerial decision-making process, it is noteworthy how these ratios illustrate a weaker performance than the industry average. Some strategies to improve the current situation include the increase in the current assets, the repayment of debt, the optimization of the logistic transport chain and inventory management, the evaluation of the fixed assets representing the lowest return on sales and their possible sale, and the cost reduction by more effective cost management. These recommendations will likely be effective considering how they will enable the company to increase the value of its current assets, decrease the current liabilities, and increase the overall profit through a better cost management. FINANCIAL REPORT MEMO 6 References Christopher, M. (2016). Logistics & supply chain management. Pearson UK. IBISWorld Sector report 44-45. Retail trade in the US. https://clients1-ibisworldcom.ezp.waldenulibrary.org/reports/us/industry/default.aspx?entid=1000 IBISWorld Sector report 45291 Warehouse clubs & supercenters. https://clients1-ibisworldcom.ezp.waldenulibrary.org/reports/us/industry/default.aspx?entid=1092 Lesakova, L. (2007, June). Uses and limitations of profitability ratio analysis in managerial practice. In International Conference on Management, Enterprise and Benchmarking (pp. 1-2). SEC. (2018). Target Corporation 2017 10-K Annual Report. Retrieved April 13, 2019, from https://www.sec.gov/Archives/edgar/data/27419/000002741919000006/0000027419-19000006-index.htm SEC. (2019a). CostCo Wholesale Corporation 2018 10-K Annual Report. Retrieved April 13, 2019, from https://www.sec.gov/Archives/edgar/data/909832/000090983218000013/0000909832-18000013-index.htm SEC. (2019b). Walmart 2018 10-K Annual Report. Retrieved April 13, 2019, from https://www.sec.gov/Archives/edgar/data/104169/000010416919000016/0000104169-19000016-index.htm 12 Months Ended Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions Revenues: Net Sales Membership and other income Total revenues Costs and expenses: Cost of sales Operating, selling, general and administrative expenses Operating income Interest: Debt Capital lease and financing obligations Interest income Interest, net Loss on extinguishment of debt Other (gains) and losses Income before income taxes Provision for income taxes Consolidated net income Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to Walmart Net income per common share: Basic net income per common share attributable to Walmart Diluted net income per common share attributable to Walmart Weighted-average common shares outstanding: Basic Diluted Dividends declared per common share Consolidated Balance Sheets - USD ($) Jan. 31, 2019 Jan. 31, 2018 $510.329 $495.761 4.076 4.582 514.405 500.343 385.301 373.396 107.147 106.510 21.957 20.437 1.975 1.978 371 352 -217 -152 2.129 2.178 0 3.136 8.368 0 11.460 15.123 4.281 4.600 7.179 10.523 -509 -661 $6.670 $9.862 $2,28 $3,29 $2,26 $3,28 2.929 2.995 2.945 3.010 $2,08 $2,04 Jan. 31, 2019 Jan. 31, 2018 $ in Millions Current assets: Cash and cash equivalents Receivables, net Inventories Prepaid expenses and other Total current assets Property and equipment: Property and equipment Less accumulated depreciation $7.722 $6.756 6.283 5.614 44.269 43.783 3.623 3.511 61.897 59.664 185.810 185.154 -81.493 -77.479 Property and equipment, net Property under capital lease and financing obligations: Property under capital lease and financing obligations Less accumulated amortization Property under capital lease and financing obligations, net Goodwill Other long-term assets Total assets Current liabilities: Short-term borrowings Accounts payable Accrued liabilities Accrued income taxes Long-term debt due within one year Capital lease and financing obligations due within one year Total current liabilities Long-term debt Long-term capital lease and financing obligations Deferred income taxes and other Commitments and contingencies Equity: Common stock Capital in excess of par value Retained earnings Accumulated other comprehensive loss Total Walmart shareholders' equity Noncontrolling interest Total equity Total liabilities and equity 104.317 107.675 12.760 12.703 -5.682 7.078 7.143 31.181 18.242 14.822 11.798 219.295 204.522 5.225 5.257 47.060 46.092 22.159 22.122 428 645 1.876 3.738 729 667 77.477 78.521 43.520 30.045 6.683 6.780 11.981 8.354 288 295 2.965 2.648 80.785 85.107 -11.542 Cash flows from operating activities: Consolidated net income Adjustments to reconcile income from continuing operations to net cash provided by operating activities: Depreciation and amortization Unrealized Gain (Loss) on Investments (Gains) and losses for disposal of business operations Deferred income taxes Loss on extinguishment of debt -10.181 72.496 77.869 7.138 2.953 79.634 80.822 $219.295 $204.522 12 Months Ended Consolidated Statements of Cash Flows - USD ($) $ in Millions -5.560 Jan. 31, 2019 Jan. 31, 2018 $7.179 $10.523 10.678 10.529 3.516 0 4.850 0 -499 0 -304 3.136 Other operating activities Changes in certain assets and liabilities, net of effects of acquisitions: Receivables, net Inventories Accounts payable Accrued liabilities Accrued income taxes Net cash provided by operating activities Cash flows from investing activities: Payments for property and equipment Proceeds from the disposal of property and equipment Proceeds from the disposal of certain operations Purchase of available for sale securities Payments for business acquisitions, net of cash acquired Other investing activities Net cash used in investing activities Cash flows from financing activities: Net change in short-term borrowings Proceeds from issuance of long-term debt Repayments of long-term debt Premiums paid to extinguish debt Dividends paid Purchase of Company stock Dividends paid to noncontrolling interest Purchase of noncontrolling interest Other financing activities Net cash used in financing activities Effect of Exchange Rate on Cash, Cash Equivalents, and Restricted Cash Net increase (decrease) in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash at beginning of year Cash, cash equivalents and restricted cash at end of period Supplemental disclosure of cash flow information: Income taxes paid Interest paid 1.734 1.210 -368 -1.074 -1.311 -140 1.831 4.086 183 928 -40 27.753 -557 28.337 -10.344 -10.051 519 378 876 1.046 0 0 -14.656 -375 -431 -77 -24.036 -9.079 -53 15.872 4.148 7.476 -3.784 -13.061 0 -3.059 -6.102 -6.124 -7.410 -8.296 -431 -690 0 -8 -629 -261 -2.537 -19.875 -438 487 742 -130 7.014 7.144 7.756 7.014 3.982 6.179 $2.348 $2.450 Months Ended Jan. 31, 2017 $481.317 4.556 485.873 361.256 101.853 22.764 2.044 323 -100 2.267 0 0 20.497 6.204 14.293 -650 $13.643 $4,40 $4,38 3.101 3.112 $2,00 Months Ended Jan. 31, 2017 $14.293 10.080 0 0 761 0 206 -402 1.021 3.942 1.280 492 31.673 -10.619 456 662 -1.901 -2.463 -31 -13.896 -1.673 137 -2.055 0 -6.216 -8.298 -479 -90 -398 -19.072 -452 -1.747 8.891 7.144 4.507 $2.351 Financial Spreadsheet Company Name: Financial Ratio 1. Current Ratio 2. Total Debt/Total Assets 3. Times Interest Earned 4. EBITDA Coverage 5. Inventory Turnover 6. Days Sales Outstanding * 7. Fixed Assets Turnover 8. Total Assets Turnover 9. Profit Margin 10. Return on Total Assets 11. Return on Common Equity * Calculation is based on 365-day year. Walmart Inc Formula = = Company Result Industry Average 0,799 1,900 22,23% 30,10% 10,313 7,100 8,371 3,300 8,75 3,90 4,494 2,700 4,815 37,100 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑆ℎ𝑜𝑟𝑡 𝑡𝑒𝑟𝑚 𝑑𝑒𝑏𝑡 + 𝐿𝑜𝑛𝑔 𝑡𝑒𝑟𝑚 𝑑𝑒𝑏𝑡 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 = = 𝐸𝐵𝐼𝑇 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 𝐸𝐵𝐼𝑇𝐷𝐴 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑒𝑥𝑝𝑒𝑛𝑠𝑒 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑠𝑎𝑙𝑒𝑠 = 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 2018 + 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 2017 2 = 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑆𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒/365 = = 𝑆𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑃𝑃𝐸 2018 + 𝑃𝑃𝐸(2017) 2 3,000 1,31% 3,40% 10,36% 7,60% 𝑆𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 2018 + 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 (2017) 2 = = 2,408 𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 𝑆𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝐸𝐵𝐼𝑇 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 2018 + 𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠 (2017) 2 8,31% = 𝑁𝑒𝑡 𝑖𝑛𝑐𝑜𝑚𝑒 𝐶𝑜𝑚𝑚𝑜𝑛 𝑒𝑞𝑢𝑖𝑡𝑦 2018 + 𝐶𝑜𝑚𝑚𝑜𝑛 𝑒𝑞𝑢𝑖𝑡𝑦 (2017) 2 References SEC. (2019). Walmart 2018 10-K Annual Report. Retrieved April 13, 2019, from https://www.sec.gov IBISWorld Sector report 44-45. Retail trade in the US. https://clients1-ibisworld-com.ezp.waldenulib IBISWorld Sector report 45291 Warehouse clubs & supercenters. https://clients1-ibisworld-com.ezp 9, from https://www.sec.gov/Archives/edgar/data/104169/000010416919000016/0000104169-19-000016-index.htm ://clients1-ibisworld-com.ezp.waldenulibrary.org/reports/us/industry/default.aspx?entid=1000 -19-000016-index.htm SF002: Executive Dashboard Conduct financial ratio analysis to understand a company’s financial health and analyze ways to improve in areas revealed as being below industry average. Assessment Rubric 0 Not Present 1 Needs Improvement 2 Meets Expectations Appropriate company that is publicly traded is selected. Appropriate company that is publicly traded is selected. Fewer than the 11 ratios are identified and correct formulas for the ratios are listed in the Excel spreadsheet. The 11 ratios are identified and correct formulas for the ratios are listed in the Excel spreadsheet. 3 Exceeds Expectations Sub-Competency 1: Compute various financial ratios. Learning Objective 1.1: Identify the ratios for chosen company and source(s) of data. Learning Objective 1.2: Calculate the values for financial ratios. Identification of the ratios for chosen company and source(s) of data is missing. Calculation of the values for the 11 financial ratios is missing. Sources for the data used in the formulas used are not completely identified or and properly cited. The 11 ratios are not completely identified or correctly computed for the company chosen. The ratio values are not clearly listed in the Excel spreadsheet. Sources for the data used in the formulas used are identified and properly cited. The 11 ratios are identified and correctly computed for the company chosen. The ratio values are clearly listed in the Excel spreadsheet. The response demonstrates the same level of achievement as “2,” plus the following: An explanation of what each of the formulas measures in detail is provided. The response demonstrates the same level of achievement as “2,” plus the following: Both numerator and denominator of calculations are listed. Sub-Competency 2: Identify financial measures that reveal a snapshot of the financial health of a business. Learning Objective 2.1: ©2015 Walden University Analysis of the Analysis only partially Analysis clearly The response 1 Analyze computations to determine which ratios are above their industry averages. Learning Objective 2.2: Analyze computations to determine which ratios are below their industry averages. 0 Not Present computations to determine which ratios are above their industry averages is missing. Analysis of computations to determine which ratios are below their industry averages is missing. 1 Needs Improvement demonstrates which of the 11 ratios are above their industry average. 2 Meets Expectations demonstrates which of the 11 ratios are above their industry average. 3 Exceeds Expectations demonstrates the same level of achievement as “2,” plus the following: Rationales are furnished for ratios selected as being above industry average, but are weak or they are not provided. Cogent rationales are furnished for ratios selected as being above industry average. An analysis of differences between company averages and industry averages is furnished. Analysis only partially demonstrates which of the 11 ratios are below their industry average. Analysis clearly demonstrates which of the 11 ratios are below their industry average. The response demonstrates the same level of achievement as “2,” plus the following: Rationales are furnished for ratios selected as being under industry average, but are weak, or they are not provided. Cogent rationales are furnished for ratios selected as being under industry average. An analysis of differences between company averages and industry averages is furnished. Specific ways in which the company can plan to improve below industry average ratio performance over time explained. The response demonstrates the same level of achievement as “2,” plus the following: At least one way for each ratio identified as being below industry average is vetted. At least two different examples of ways in which the company can plan to improve below industry average ratio performance Sub-Competency 3: Interpret financial ratios to appraise financial condition. Learning Objective 3.1: Determine specific ways for a company to improve financial performance over time. Determination of specific ways for a company to improve financial performance over time is missing. Ways in which the company can plan to improve below industry average ratio performance over time are furnished, but they are not well explained. At least one way for each ratio identified as being below industry average is ©2015 Walden University 2 0 Not Present Learning Objective 3.2: Present rationales as to why recommendations for improvement in financial ratio performance will be effective. Presentation of rationales as to why recommendations for improvement in financial ratio performance will be effective is missing. 1 Needs Improvement not vetted. Annual targets over the next 3 years to catch up with or surpass industry averages are not or only partially identified for ratios designated as being substandard. Provides some rationales for some of the ways in which the company can improve below industry average ratio performance over time. 2 Meets Expectations Annual targets over the next 3 years to catch up with or surpass industry averages are identified for each ratio identified as being substandard. 3 Exceeds Expectations over time are explained. Provides cogent rationales for specific ways in which the company can improve below industry average ratio performance over time. The response demonstrates the same level of achievement as “2,” plus the following: Examples of how other companies have improved financial ratios. Rationale does not include Rationale includes why why time horizon selected time horizon selected and and annual improvement annual improvement targets are reasonable for targets are reasonable for the company to achieve. the company to achieve. Sub-Competency 4: Detect problems and limitations of ratio analysis using financial statements. Learning Objective 4.1: Identification of salient Fewer than three Three limitations of using Identify salient limitations of use of ratio limitations of using financial ratios analysis limitations of use of analysis is missing. financial ratios analysis exclusively to gauge ratio analysis exclusively to gauge overall financial health are exclusively. overall financial health are clearly identified. clearly identified. Suitable and specific Explanations of each explanations of each limitation identified are limitation identified are provided, but are not provided. ©2015 Walden University The response demonstrates the same level of achievement as “2,” plus the following: A fourth limitation of using financial ratios analysis exclusively to gauge overall financial health is clearly identified. 3 0 Not Present Learning Objective 4.2: Assess qualitative factors that may play important roles in improving financial performance to complement ratio analysis. Assessment of qualitative factors that may play important roles in improving financial performance to complement ratio analysis is missing. 1 Needs Improvement specific or stated clearly. Explanations are not in the context of the chosen company’s situation. Assessment shows fewer than three qualitative factors that may play important roles in improving financial performance to complement ratio analysis and/or are not clearly detailed. The qualitative factors assessed are not in the context of the chosen company’s situation. 2 Meets Expectations 3 Exceeds Expectations Explanations are in the context of the chosen company’s situation. Assessment clearly details three qualitative factors that may play important roles in improving financial performance to complement ratio analysis. Qualitative factors assessed are in the context of the chosen company’s situation. The response demonstrates the same level of achievement as “2,” plus the following: A fourth qualitative factor that may play an important role in improving financial performance to complement ratio analysis is detailed. PS001: Written Communication: Demonstrate graduate-level writing skills. Learning Objective PS 1.1: Use proper grammar, spelling, and mechanics. Multiple major and minor errors in grammar, spelling, and/or mechanics are highly distracting and seriously impact readability. Multiple minor errors in grammar, spelling, and/or mechanics are distracting and negatively impact readability. Learning Objective PS 1.2: Organize writing to Writing is poorly organized and incoherent. Introductions, transitions, Writing is loosely organized. Limited use of introductions, transitions, ©2015 Walden University Writing reflects competent use of standard edited American English. Errors in grammar, spelling, and/or mechanics do not negatively impact readability. Writing is generally wellorganized. Introductions, transitions, and Grammar, spelling, and mechanics reflect a high level of accuracy in standard American English and enhance readability. Writing is consistently well-organized. Introductions, transitions, 4 APA conventions for attribution of sources, structure, formatting, etc., are applied inconsistently. 2 Meets Expectations conclusions provide continuity and a logical progression of ideas. APA conventions for attribution of sources, structure, formatting, etc., are generally applied correctly in most instances. Sources are generally cited appropriately and accurately. 3 Exceeds Expectations and conclusions are used effectively to enhance clarity, cohesion, and flow. APA conventions for attribution of sources, structure, formatting, etc., are applied correctly and consistently throughout the paper. Sources are consistently cited appropriately and accurately. PS003: Technology: Use technology tools effectively. Learning Objective Excel spreadsheet is Excel spreadsheet has PS 3.2: incomplete or missing. some formatting issues Apply the features of and is difficult to interpret. Excel to communicate information effectively. Excel spreadsheet has effective formatting, and the data can be easily read and interpreted. Excel spreadsheet includes format and design elements that bring enhanced clarity to the spreadsheet. enhance clarity. Learning Objective PS 1.3: Apply APA style to written work. 0 Not Present and conclusions are missing or inappropriate. 1 Needs Improvement and conclusions provides partial continuity. APA conventions are not applied. PS005: Critical Thinking and Problem Solving: Use critical-thinking and problem-solving skills to analyze professional issues and inform best practice. Learning Objective PS 5.1: Analyze assumptions and fallacies. ©2015 Walden University Analysis of assumptions is missing. Response is weak in assessing the reasonableness of assumptions in a given argument. Response generally assesses the reasonableness of assumptions in a given argument. Response clearly and comprehensively assesses the reasonableness of assumptions in a given argument. Response does not adequately identify and discuss the implications of fallacies or logical weaknesses in a given Response identifies and discusses the implications of fallacies and/or logical weaknesses in a given argument. Response provides a detailed and compelling analysis of implications of fallacies and logical weaknesses in a given 5 0 Not Present Learning Objective PS 5.2: Generate reasonable and appropriate assumptions. Learning Objective PS 5.3: Assess multiple perspectives and alternatives. Learning Objective PS 5.4: Use problem-solving skills. ©2015 Walden University Assumptions are missing. 1 Needs Improvement argument. Response does not adequately present and discuss key assumptions in an original argument. 2 Meets Expectations Response presents and discusses key assumptions in an original argument. 3 Exceeds Expectations argument. Response justifies the reasonableness and need for assumptions in an original argument. Assessment of multiple perspectives is missing. Response does not identify nor adequately consider multiple perspectives or alternatives. Response identifies and considers multiple perspectives and alternatives. Response justifies selection of chosen alternative relative to others. Problems and solutions are not identified. Response presents solutions, but they are ineffective in addressing the specific problem. Response presents solutions that are practical and work in addressing the specific problem. Response presents compelling supporting arguments for proposed solutions. 6
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