Fluent Essays

Week 1 ProjectAssignment Due March 30 at 12:59 AM Course Project This course has a project that will encompass Weeks 1 through 5. You will keep your information from each week for a summary report in Week 5. Select a publically traded company. Go to the company’s Web site. Try one that you are familiar with—you shop at their store, eat at their restaurants, or wear their clothes.  On their Web site, try to find their annual financial report. Sometimes, these are found under “Investor Relations”.  Tasks: For the company, you selected, analyze your company’s operations and the market in which it operates. Evaluate the EVA, and free cash flow using the firm’s annual report. Analyze the firm’s ROA and ROE.  Explain the difference between the two measures.  Submission Details: Submit a 3-4 page Microsoft Word document, using APA style.Finance Finance is the study of the allocation of scarce resources. It includes elements of economic costs and bene�ts. The resources we study include �nancial capital and economic capital. Finance is dynamic because time is an important element. Financial decision-making uses signi�cant commitments of resources, since decisions are being made about the future. Finance involves management— information, risk, and uncertainty vary to complicate decisions on adding value to the �rm. The planning, organization, leading, and controlling results affect a �rm’s objective of maximizing shareholder wealth. Finance starts with �nancial accounting—the system of �nancial accounting (accrual accounting) and scorecards of �nancial statements (i.e., the balance sheet, the income statement, and the statement of cash �ows). Tracking and timing of revenue, expenses, earnings, and cash �ow are essential in accounting. The accounting equation is: Total Assets (TA) = Total Liabilities (TL) plus Owner’s Equity (OE) Assets are what we use to create value, and they are �nanced by liabilities and equity. In the balance sheet the right-hand side balances with the left-hand side of the equation. The accounts (current assets, long-term assets, current liabilities, long-term liabilities, and equity) are measured as stock variables—a measure of the amount of each item at a point in time. Two key aspect of a balance sheet are: 1. The balance sheet is a picture of the �rm as of one point in time. It does not provide information for any period of time. 2. The ordering of the accounts is according to decreasing liquidity (ease of conversion to cash).Financial Statements All of the �nancial statements used have a different importance. Many people consider the income statement the most important of the four �nancial reports, because it conveys whether a business achieved its pro�tability goal; in other words, whether the company earned an acceptable level of income or beat the targeted goal. Sometimes, this is referred to as making your numbers. The balance sheet is frequently viewed as runner-up to the income statement in terms of importance. However, this statement shows the companys �nancial status at a speci�c date and indicates how effectively assets are being managed to generate returns. This report is unique in that it presents a view of a business as a holder of resources (assets) that are equal to the claims against those assets. The claims consist of the companys liabilities and the owner’s equity in the company. The statement of cash �ows focuses mainly on a companys liquidity versus a companys pro�tability or �nancial position. Cash �ows are nothing more than the in�ows and out�ows of cash in and out of a company. The statement of cash �ows illustrates the cash produced by business operations during an accounting period, as well as vital investing and �nancial activities that occurred during the same period. Keep in mind that this statement uses the cash basis method of accounting. Most corporations use accrual based accounting, so the statement of cash �ows may be the only place you can determine the current cash situation. The statement of owners equity portrays the changes in owners equity over an accounting period. Typically, net income/loss is added/subtracted from the beginning retained earnings balance. Any withdrawals or dividends that were paid are deducted from this total to determine the ending capital balance. Each type of �nancial statement is used in a different way, depending on the needs of the user. Income statement: Used to determine a companys pro�tability Balance sheet: Assesses whether the company has enough assets to cover any outstanding liabilities Statement of cash �ows: Used by creditors to determine whether a company is liquid or not, because the statement tracks in�ows and out�ows for operating, investing, and �nancing activities Statement of owners equity: Breaks down a companys capital and ownership accountsThree Capitals of Finance The �eld of �nance contains four interrelated areas: �nancial management (corporate �nance), �nancial markets and institutions, international �nancial management, and investments. Within those four areas, we focus upon three elements of capital: working capital, capital budgeting, and capital structure. Capital management is also known as operations. The �nancial statements associated with it are the balance sheet, income statement, and statement of cash �ows. All current assets and current liabilities from sales to EBIT operating activities are associated with capital management. Capital budgeting is also known as planning and investing. The balance sheet and the statement of cash �ows are the �nancial statements associated with this type of capital management. Long-term or �xed assets and investing activities are the accounts associated with capital budgeting. Capital structure is also known as �nancing. The �nancial statements associated with it are the balance sheet, income statement, statement of cash �ows, and retained earnings or equity. Long-term liabilities and equity from EBIT to net income �nancing activities are associated with capital structure. The �nancial statements show the companys operations and results in �nancial terms. Accountants create these �nancial statements each accounting period to present the current results of company operations. These �nancial statements are used internally and externally. These are the four primary �nancial statements: Income statement: describes a companys revenues and expenses along with the resulting net income or loss over a period. (Net income occurs when revenues exceed expenses. Net loss occurs when expenses exceed revenues.) Balance sheet: describes a companys �nancial position (types and amounts of assets, liabilities, and equity) at a point in time. Statement of cash �ows: identi�es cash in�ows (receipts) and cash out�ows (payments) over a de�ned period of time. Statement of stockholders equity: explains changes in equity from net income (or loss) and from owner investment and withdrawals over a de�ned period of time.Criteria No Submission 0 points Emerging (F through D Range) (12-14) 14 points Satisfactory (C Range) (14-16) 16 points Proficient (B Range) (16-18) 18 points Exemplary (A Range) (18-20) 20 points Criteri Score Analyzed your company’s operations and the market in which it operates. / 20Did not identify your company’s operations and the market in which it operates. Unsupported with research. Identified your company’s operations and the market in which it operates. Lacked credible research support. Described your company’s operations and the market in which it operates. Weakly supported with research. Analyzed your company’s operations and the market in which it operates. Sufficiently supported with research. Analysis of your company’s operations and the market in which it operates was compelling and showed well- developed logical progression. Well supported by research. Criteria No Submission 0 points Emerging (F through D Range) (6-7) 7 points Satisfactory (C Range) (7-8) 8 points Proficient (B Range) (8-9) 9 points Exemplary (A Range) (9-10) 10 points Criterio Score Evaluated the EVA, and free cash flow using the firm’s annual report. / 10Did not identify the EVA, and free cash flow using the firm’s annual report. Unsupported with research. Identified the EVA, and free cash flow using the firm’s annual report. Lacked credible research support. Described the EVA, and free cash flow using the firm’s annual report. Weakly supported with research. Evaluated the EVA, and free cash flow using the firm’s annual report. Sufficiently supported with research. Evaluation of the EVA, and free cash flow using the firm’s annual report was compelling and showed well- developed logical progression. Well supported by research. Criteria No Submission 0 points Emerging (F through D Range) (6-7) 7 points Satisfactory (C Range) (7-8) 8 points Proficient (B Range) (8-9) 9 points Exemplary (A Range) (9-10) 10 points Criterion Score Analyzed the firm’s ROA and ROE. / 10Did not identify the firm’s ROA and ROE. Unsupported with research. Identified the firm’s ROA and ROE. Lacked credible research support. Described the firm’s ROA and ROE. Weakly supported with research. Analyzed the firm’s ROA and ROE. Sufficiently supported with research. Analysis of the firm’s ROA and ROE was compelling and actionable. Well supported by research. Criteria No Submission 0 points Emerging (F through D Range) (6-7) 7 points Satisfactory (C Range) (7-8) 8 points Proficient (B Range) (8-9) 9 points Exemplary (A Range) (9-10) 10 points Cr Sc Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in Submission contains no discernible overall intent in author’s selection of ideas. Errors in basic writing conventions are sufficiently Submission contains random presentation of ideas, which prevents