For this part of the course project, you will demonstrate your ability to evaluate the strengths and weaknesses of a company through financial analysis.
This is a two-part assignment. To complete this assignment, do the following:
Part 1: Cash Flow Analysis
Your client, Jennifer Logan, is a relatively inexperienced investor and is trying to make a decision whether to sell her investment in ABC Company or continue to hold her equity position in it. Ms. Logan has asked you to analyze to analyze ABC’s cash flow statement and provide a recommendation. Using ABC Company’s Statement of Cash Flows, write an analysis and recommendation for Ms. Logan.
Download and read ABC Company’s Statement of Cash Flows.
Write a 3-4 page document for Ms. Logan that includes the following information:
Define and explain balance sheet, income statement, and statement of cash flows.
Describe how the statement of cash flows relates to the income statement and balance sheet.
Explain why the analysis of a statement of cash flows is important to investors.
Analyze and judge the cash flow from operating activities at ABC Company. Is ABC effective at utilizing funds within the company?
Analyze and explain the significance of each item from the investing section of the statement.
Analyze the cash flow from the financing section of the statement and describe why the dividends section is important to your client.
Summarize your analysis and give your opinion on how effective ABC Company is at managing its cash flow, from an investor’s perspective. Also explain whether you think ABC Company has enough cash on hand to sustain it in the long term.
Recommend whether Ms. Logan should hold or sell her investment in ABC Company.
Adhere to professional formal and stylistic principles, and be sure to cite sources when necessary.
Part 2: Executive Summary
Write a 2-3 page executive summary of how the Federal Reserve’s monetary policies may affect economic growth, both from a corporate and a personal finance perspective. In order to ensure that your response is complete, please be sure to include commentary on the following concepts:
The banking industry
TVM
Personal and corporate saving rates
Equity financing vs. debt financing
Financial analysis
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