University of Florida Robust Financial Appraisal Paper

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Cngevq007

Business Finance

University of Florida

Description

A robust financial appraisal of a company's finances would normally entail the analysis of its cash flow, income statement, balance sheet, and retained earning statements. In this assignment you focus your analysis on a public company's balance sheet to evaluate its financial health. The balance sheet represents high-level elements of the other reports, so it provides a good "big picture" view of the company's finances.

Preparation

Choose a publicly held company and review its 2019 annual report on the Internet. Pay particular attention to the balance sheet upon which this assignment is based.

Instructions

  • Provide a Web link to the balance sheet of the corporate report that you have chosen.
  • Evaluate the company's health by analyzing its balance sheet. Do the following in 4–5 pages:
    • Evaluate the corporation's financial health based upon an analysis of each section (assets, liabilities, and owner's equity) of its balance sheet. Make sure to reference specific items on each sheet and ways that they relate to one another.
    • Conduct the following tests on the balance sheet (show your results) and explain what each reveals:
      • Vertical.
      • Horizontal.
      • Ratio Analysis. Make sure to compare your ratio with the industry benchmark or other competitors.
    • Assess the company's current financial health based the accurate interpretation of findings of the three tests. Include risks in your assessment. Support your conclusions.
    • Suggest and support three ways to significantly improve the company's financial health based upon your analysis.

This course requires the use of Strayer Writing Standards. For assistance and information, please refer to the Strayer Writing Standards link in the left-hand menu of your course. Check with your professor for any additional instructions.

The specific course learning outcome associated with this assignment is:

  • Analyze a financial statement to determine corporate financial health.

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Explanation & Answer

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

Robust Financial Appraisal

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Date

Link: https://www.wsj.com/market-data/quotes/GOOG/financials/annual/balance-sheet
Company's Health
Google Inc. lists international companies that presented a strong financial growth in
2019. Google Inc. focuses on assets that increase the flow of income with positive change over
the years. The financial statements indicate that Google Inc. recorded a revenue of $162 which
equates to 18% growth. The good financial health is attributed to the company's focus to invest
in computer science and artificial intelligence. The total asset growth was 18.52% in 2019,
higher than in the previous year, at 17.99%.
Balance Sheet Evaluation
Google Inc. maintains high inventories as it focuses on the demand and potential gaps in
the future. The company invested highly in 2019, with a total asset value of 275,909, a
significant increase from the previous year. The total current assets stood at $152,578, which is
an increase from the prior year when the company's total assets were valued at $135 676. Google
Inc. has a high cash equivalent totaling $18,498 with high marketable security. The company
prefers to invest in market security, which helps clear some of the unpredicted expenses. A
company needs to develop a sense of security, especially on external factors that affect the
industry. Google Inc. is among the companies with a significantly sizeable net inventory in the
technological sector. The intention to invest in assets helps the company have a stable financial
state, making it competitive. Google Inc. owns several properties and equipment attributable to
the company's financial health.
In 2019, Google Inc.'s total liabilities were valued at 74,467, a decrease from the previous
year. The value shows that the company reduced expenses with an increase in income. The low

value of liabilities indicates financial success and stable investments. Google Inc. invests in longterm liabilities which have high returns. For instance, the company invests in software
development projects that yield high over the years. The operating lease liabilities were at zero,
which reduced the debts. This is a competitive advantage as most companies in the technology
industry have a high operating lease which attributes to financial losses. The company does not
take long to repay the current liabilities, evidenced by the decreasing balance. The owned equity
is high as the company sold many shares, which increased stocking. Google Inc. also purchased
some of the shares sold, which helped raise the stock. Based on the balance sheet evaluation,
Google Inc. has a positive financial health, which makes it competitive.
Analysis
In further analysis of the balance sheet, the vertical analysis is calculated by dividing the
specific item of the balance sheet by the total assets. The values were converted into percentages
by multiplying with 100.
Vertical analysis=Item/total assets*100
The horizontal analysis reviews the financial statements of Google Inc. several times and
reflects the percentage growth. The horizontal analysis gives infor...


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