Rasmussen College Organization Financial Statement Analysis

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zeberbf

Economics

Rasmussen University

Description

Background

An organization cannot effectively design or implement strategic initiatives without an excellent understanding of its financial health. This understanding can only be determined by properly analyzing financial statements. In this assignment, you will evaluate the financial health of three organizations by examining the organizations' financial statements which document their assets, liabilities, equity, revenues, and expenses.

A company's financial performance is broken down into four main performance categories: profitability, liquidity, asset utilization, and debt/leverage. The most effective way to analyze financial statements and measure performance in these critical areas is to compute and interpret financial ratios.

Instructions

You are a senior financial analyst for Capital Financial, a fictitious investment firm based in Dallas, TX. Capital Financial would like to allocate at least $500,000 of their capital to purchase shares in a firm in the software section within the technology sector. As the analyst, you must make an informed recommendation to the senior leadership team in a report that addresses the following:

  1. Identify three similarly sized firms (small to mid-cap) in the software section of the technology sector.
  2. For each of the three firms, calculate three ratios from each of the four performance categories (12 ratios for each company) and incorporate them into the body of your report.
  3. Select the ratio from each performance category that you feel is essential to use when comparing the firms. Use the ratio selected from each category to create a bar chart that illustrates the firms' performance relative to one another.
  4. Explain why the ratios you selected are the best for determining the strength of the three firms.
  5. Use your ratio computations to describe each firm's level of strength in each performance category.
  6. Provide a final recommendation indicating which of the three firms Capital Financial should purchase shares in.

Unformatted Attachment Preview

Financial Performance 7 6 5 4 3 2. L 1 0 Company A Company B Company C Liquidity Profitability Leverage Asset Utilization
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Explanation & Answer

View attached explanation and answer. Let me know if you have any questions.

Running Head: FINANCIAL STATEMENT ANALYSIS

Financial Statement Analysis
Name:
Institutional Affiliation:
Date:

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FINANCIAL STATEMENT ANALYSIS

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Table of Contents
Financial Statement Analysis ..................................................................................................................... 3
Selected companies...................................................................................................................................... 3
Ratio analysis............................................................................................................................................... 4
CommVault Systems ................................................................................................................................... 4
Upland Software.......................................................................................................................................... 6
Sprout Social................................................................................................................................................ 7
Selected ratio and rationale for selection .................................................................................................. 8
Recommendation for investors ................................................................................................................ 10
References ................................................................................................................................................... 12

FINANCIAL STATEMENT ANALYSIS

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Financial Statement Analysis
Determining the best stock for investment requires analyzing the financial reports offered
through the historical context. However, investors can gain insight into the financial performance
a given firm reports considering the resulting ratios. These ratios play a crucial role since they
give the investors a framework for exploring the common factors influencing a firm`s growth.
This project will consider Capital Financial, which intends to buy shares from a software
technology firm in the small to mid-capitalization categories. This decision will be influenced by
considering three selected mid-cap firms dealing with software development and technological
solutions addressing the four primary ratio categories: profitability, liquidity, asset utilization,
and debt/leverage. These categories will provide the ideal framework for understanding the
financial strength of the selected firms.
Selected companies
This project has selected three of the growing small to mid-cap techn...


Anonymous
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