Final project

Final project

FIN 330: Final Project Guidelines and Grading Guide

Overview
This project requires the completion of a comprehensive financial analysis of a company seeking to expand operations. A scenario is presented below as a case study that requires analysis and resolution.

This assessment will evaluate your mastery with respect to the following course outcomes:

•    Understand at a deeper level the economic analysis of strategic and tactical investments, the effect financial leverage has on firm value, and the integration of investment and financial corporate strategies
•    Analyze issues that face modern corporate managers when making capital budgeting and capital structure decisions
•    Apply finance valuation techniques for purposes of business decision making
•    Integrate, synthesize, and present finance concepts and analyses
•    Be able to use the corporate finance tools necessary to develop the skills, knowledge, and wisdom (SKW) in current demand by employers
•    Understand the qualities needed for careers such as corporate managers, financial analysts, investment analysts, brokers, and business practitioners

Prompt
Scenario: Felicia & Fred, a publicly held U.S. corporation and manufacturer of jewelry, requires a financial analysis of its current year operating performance. Previously, the company expanded capacity to include a Czech crystal bracelet product line. During this year, the company expanded its product offering to include women’s accessories, specifically handbags. These are outsourced through a licensing agreement the company initiated with a manufacturer in Asia. In order to preserve intellectual property and branding rights in the United States, this manufacturer exclusively has the right to Felicia & Fred’s women’s logo purses.

As previously mentioned, the company’s inventory investment has grown, but to date it has not required additional storage space in terms of increases in total plant and property since the company is renting warehouse space to accommodate the necessary real estate. However, the company anticipates that this will change if the demand for this product continues to be met with fervor among its customer base.

Given these considerations and the results indicated in the company’s income statements and balance sheets for the prior year and current year, as well as the company’s cash flow statement for the current year, answer the following questions and address specific qualitative elements as requested.

I.    Introduction/Abstract: Discuss briefly the difference between strategic and tactical decision making.
A.    Is the decision to enter the handbag distribution business strategic or tactical?
B.    What indications of financial performance must a company consider in evaluating whether an investment has successfully increased shareholder wealth?

II.    Financial Trend Analysis: Directly analyze the firm’s financial statements as presented in the Exhibits.
A.    Calculate liquidity ratios of the firm for the prior year and current year: current ratio, inventory turnover, and the accounts receivable turnover (for the denominator of the turnover ratios, use the year presented). Show your calculations and interpret the trend. What conclusions do you draw from this analysis?
B.    Calculate the following solvency ratios of the firm for the prior year and current year: debt to equity and times interest earned. Show your calculations and interpret the trend. What conclusions do you draw from this analysis?
C.    Calculate the following profitability ratios of the firm for the prior year and current year: gross profit margin, net profit margin, return on assets, and return on equity (for the denominator of the return ratios, use the year presented). Show your calculations and interpret the trend. What conclusions do you draw from this analysis?

III.    Integrate Prior Financial Analysis
Consider the prior analysis Felicia & Fred completed for the Czech crystal bracelet product line. Given the prior analysis and the profitability trend of the company, did the inclusion of this product line as compared to the prior year results enhance gross margin for the company? Why or why not? Show calculations and interpret the results.

IV. Long-Term Financial Planning: Prepare updated financial statements for Felicia & Fred based on the following assumptions:
A.    The company’s sales are projected to grow by 10% next year. Calculate the effects and present the forecasted income statement and balance sheet for the company.   Also consider that this sales increase will not require any new capital investments needed in land and buildings and that mortgages will remain the same.   Depreciation will remain constant and will accrue year over year in the balance sheet.

B.    Indicate the amount of external financing required by the company for next year.

V.    Qualitative and Ethical Considerations of Financial Analysis
A.    The cost of capital may change when there are incremental capital requirements obtained from different sources, resulting in changes in capital structure. What qualitative considerations are important for a company seeking to raise capital? Answer this by considering the effect of leverage in your response. Specifically, what expected effects will additional leverage have on a company’s decision to accept investment projects? As the cost of capital increases or decreases, are managers more or less likely to accept capital projects? What is the effect on shareholder wealth when managers accept projects based upon fluctuations in cost of capital? Should shareholders be concerned about the ethics of managers’ selection processes?

B.    Agency conflicts arise when there are differences in the goals of the firm versus the personal goals of managers. What qualitative considerations are important for the mitigation of agency conflicts in relation to the acceptance and completion of capital projects? Indicate the types of monitoring costs and why these are critical. What monitoring activities are required to ensure that project acceptance and outcomes benefit shareholders? What approaches might be necessary to ensure managers make ethical project investment decisions?
Rubric
Requirements of submission: The final document should be 10–15 double-spaced pages, in addition to the cover page and reference page, written in APA format, using 12-point font, Times New Roman, with at least 5–7 references. Include tables sourced from spreadsheets for your calculations of financial analysis.

Critical Elements    Exemplary    Proficient     Needs Improvement    Not Evident     Value
Introduction/ Abstract: Strategic or Tactical?    Provides all detail from “Proficient” and includes information that shows an exemplary grasp of the theory of investment valuation and success by giving ample details of each of the required elements, including tactical and strategic investments
(5)    Gives a general overview of the nature of investment; identifies what characteristics of this investment relate to the value of the firm; describes adequately the implication of this investment for firm success, as well as tactical and strategic investments
(4.25)    Provides most of the details from “Proficient,” but includes little supporting information on the important elements, such as what characteristics of the entity correlate to the definition(s) of a successful investment, as well as tactical and strategic investments
(2.75)    Provides few or none of the details from “Proficient,” excluding important elements such as the characteristics that constitute a successful investment; does not adequately define tactical and strategic investments
(0)    5
Introduction/ Abstract: Increased Shareholder Wealth
Provides all detail from “Proficient” and includes information that shows an exemplary grasp of the theory of investment valuation and success by giving ample details of each of the required elements
(5)    Describes what indications of financial performance a company must consider in evaluating whether an investment has successfully increased shareholder wealth

(4.25)    Provides most of the details from “Proficient,” but includes little supporting information on the important elements such as increased shareholder wealth through increases in income-generating assets
(2.75)    Provides few or none of the details from “Proficient,” excluding important elements such as increased shareholder wealth through increases in income-generating assets

(0)    5
Financial Trend Analysis: Liquidity
Provides all detail from “Proficient” and includes information that shows an exemplary grasp of the calculation method for ratios and insightful interpretation of the financial trend of the company in terms of liquidity
(7)    Correctly applies the calculation method for ratios and provides interpretation of the financial trend of the company by describing directional change in trend in terms of liquidity

(5.95)    Applies the calculations method for ratios with some errors and/or provides limited interpretation of trend of the company in terms of liquidity

(3.85)    Either applies the calculation methods inaccurately, or does not appropriately interpret the financial trend of the company in terms of liquidity

(0)    7

Financial Trend Analysis: Solvency
Provides all detail from “Proficient” and includes information that shows an exemplary grasp of the calculation method for ratios and insightful interpretation of the financial trend of the company in terms of solvency
(6)    Correctly applies the calculation method for ratios and provides interpretation of the financial trend of the company by describing directional change in trend in terms of solvency

(5.1)    Applies the calculation method for ratios with some errors and/or provides limited interpretation of trend of the company in terms of solvency

(3.3)    Either applies the calculation methods inaccurately, or does not appropriately interpret the financial trend of the company in terms of solvency

(0)    6
Financial Trend Analysis: Profitability
Provides all detail from “Proficient” and includes information that shows an exemplary grasp of the calculation method for ratios and insightful interpretation of the financial trend of the company in terms of profitability
(7)    Correctly applies the calculation method for ratios and provides interpretation of the financial trend of the company by describing directional change in trend in terms of profitability

(5.95)    Applies the calculation method for ratios with some errors and/or provides limited interpretation of trend of the company in terms of profitability

(3.85)    Either applies the calculation methods inaccurately, or does not appropriately interpret the financial trend of the company in terms of profitability

(0)    7
Integrate Prior Financial Analysis: Crystal Bracelet Line
Provides all detail from “Proficient” and includes information that shows an exemplary grasp of the integration of prior analysis, including profitability of projects; interprets trend insightfully
(10)    Correctly incorporates the prior analysis and provides interpretation of the profitability of projects, describing directional change in trend resulting from prior projects

(8.5)    Incorporates the prior calculations with some errors and/or provides limited interpretation of the directional change in trend resulting from prior projects

(5.5)    Either interprets the prior calculations inaccurately, or does not appropriately interpret the directional change in trend of the company resulting from prior projects

(0)    10
Integrate Prior Financial Analysis: Handbag Line
Provides all detail from “Proficient” and includes information that shows an exemplary grasp of the integration of prior analysis, including profitability of projects; interprets trend insightfully
(10)    Correctly incorporates the prior analysis and provides interpretation of the profitability of projects, describing directional change in trend resulting from prior projects

(8.5)    Incorporates the prior calculations with some errors and/or provides limited interpretation of the directional change in trend resulting from prior projects

(5.5)    Either interprets the prior calculation inaccurately, or does not appropriately interpret the directional change in trend of the company resulting from prior projects

(0)    10
Long-Term Financial Planning: Income Statement and Balance Sheet
Provides all detail from “Proficient” and includes correct calculations of forecasted income statement and balance sheet

(10)    Calculates forecasted income statement and balance sheet, as well as the external financing required by the company; financial statements are articulated, but include 1–2 errors
(8.5)    Calculates forecasted income statement and balance sheet; financial statements are not articulated and/or include 3–4 errors

(5.5)    Either calculates forecasted income statement and balance sheet incorrectly and/or financial statements are not articulated and/or include more than 4 errors

(0)    10
Long-Term Financial Planning: External Financing
Provides all detail from “Proficient” and includes correct calculations of the external financing required by the company; financial statements are articulated
(10)    Calculates the external financing required by the company; financial statements are articulated, but include 1–2 errors

(8.5)    Calculates the external financing required by the company; financial statements are not articulated and/or include 3–4 errors

(5.5)    Either incorrectly calculates the external financing required by the company and/or financial statements are not articulated and/or include more than 4 errors
(0)    10
Ethical and Qualitative Considerations:
Cost of Capital and Project Selection
Provides all detail from “Proficient” and includes information that shows an exemplary grasp of the qualitative considerations for financial leverage, project selection and shareholder concerns; describes applications to the case
(10)    Describes the qualitative considerations for financial leverage, project selection and shareholder concerns; describes application to the case

(8.5)    Describes one or more the qualitative considerations for financial leverage, project selection and shareholder concerns; limited application to the case

(5.5)    Either does not describe the qualitative considerations for financial leverage, project selection, and shareholder concerns, or does not demonstrate application to the case

(0)    10
Qualitative and Ethical Considerations:
Agency/Monitoring Costs
Provides all detail from “Proficient” and includes information that shows an exemplary grasp of the qualitative considerations for mitigations of agency conflicts and monitoring activities; describes applications to the case
(10)    Describes the qualitative considerations for mitigations of agency conflicts and monitoring activities; describes application to the case

(8.5)    Describes one or more the qualitative considerations for mitigations of agency conflicts and monitoring activities; limited application to the case

(5.5)    Either does not describe the qualitative considerations for mitigations of agency conflicts and monitoring activities, or does not demonstrate application to the case

(0)    10
Articulation of Response    Provides all detail from “Proficient” and shows an exemplary use of the required elements

(10)    Ideas are clearly set forth with good sentence construction, correct grammar and punctuation, and appropriate use of APA style
(8.5)    Ideas are clearly set forth with adequate sentence construction, but include some grammar and punctuation errors and/or inconsistent use of APA style
(5.5)    Ideas are not clearly set forth with adequate sentence construction and include grammar and punctuation errors and/or poor use of APA style
(0)    10
Earned Total
Comments:    100%

find the cost of your paper