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Trend Analysis

In a 4–5 page paper, use the Financial Trend Monitoring System to identify financial factors affecting the financial solvency of a state, a local, or a nonprofit agency. You may choose a new agency to analyze or use one of the agencies you looked at in a previous assignment. (A federal agency or department should not be used for this assignment.) Using the financial factors from Table 7.1, pick 2–3 factors and conduct a trend analysis.
Evaluate selected financial factors by analyzing financial data over at least the last five years. Title this section Trend Analysis.
See Table 7.1 Factors Affecting Financial Condition for a list of financial factors.
Create a table or chart with each factor indicating the direction of the trend. Title this section Data Analysis. (Note: This section should only consist of at least two or three tables or charts.)
Justify your table or chart for each factor by writing a brief evaluation of the trend. Title this section Trend Evaluation.
Develop and explain a policy statement based on your findings to manage areas of concern. Title this section Policy Statement.

Sample Solution

are taken into consideration. Access Intelligence net losses widened to has been £-3243 in 2015 , £ -1963 in 2016, £ -2777 in 2017(all in ‘000) after interest and tax payments . So it is highly evident that net profit of the company has been in tune with the debt to equity ratio. The more the debt component in the last 3 financial years, the more the loss company has incurred. It is particularly observed that, the cost incurred in non recurring items are the main reason for huge loss. The high cost of research and development cost ( £1595 in 2017 ,£ 1664 in 2016 , £1922 in 2015) [ all in ‘000] involved in the software development has also been a major cause of loss for the company in the last 3 financial year. Therefore a substantial amount of debt has been taken for the research and development in all the last 3 financial years which increased the debt component and didn’t fetch reasonable revenue for the company. This has resulted in significant amount of loss. So finally, from the overall analysis , it can be stated that risky investment made by the company such as incurring high research and development to build new product has lead to the increase debt capital and make the company extremely over levered. It is also evident from the in-depth observation of the published annual report of the company that the management hadn’t declared dividend any interim or final dividend in the last 3 financial year. The main reason that the management has provided to the shareholders that they are pursuing some major ongoing investment in some product development, which requiring high amount of money and hence no dividend has been declared. Since no dividend has been paid, it will certainly does not help in increasing Return on Investment for the shareholders. The non-payment of the dividend to the shareholders of the company might have a negative sentiments on the shareholders of the company. But in reality, the share price of the company has raised from £2.53 in January 2015 to £4.63 in December 2017. This is because of the fact that the investors are hoping that company will perform better in future because of the ongoing investment in research and development for implementation of new products. So the aspect of increase in valuation of the company in spite of non-payment of dividend can be substantiated by Modigliani Miller Theory of Dividend Policy. As per the Modigliani Miller Theory of Dividend Policy, dividend policy of a firm does not affect the wealth of the investors. Other things of company remained constant under certain assumptions. The management of Access Intelligence haven’t paid any dividend mainly for generating losses and ongoing heavy investment in product development with debt capital. The increase in valuation during the last 3 period when the company haven’t bared any
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