You are required to produce a management report entitled, “Financial Analysis of Energy firms” based on the evidence supplied in the case study.
Length of Report: Word processed- maximum of 3000 words excluding References and Executive Summary.
Specifically, you are required to:
Conduct a financial analysis of the four firms based in the USA, using financial techniques such as trend analysis and financial ratio analysis, based on the case study provided and submit a professional report as outlined below.
Briefly summarise the approach taken in the report and the key findings.
Background – briefly describe the background context of the companies’ organisation (e.g. historic information on the company’s formation, the financial performance, and the key products and services) and provide an outline of your report.
3. General Financial Statements Analysis
Based on the financial statements provided (Table 1 and 2), evaluate and compare each company in terms of key figures such as total assets, long term debt, other liabilities, operating profit, net income over the period 1995-1997. Critically analyse and assess the changes in these key indicators with respect to each company. You should include critical discussion of potential reasons that led to these changes and the likely consequences on the organisations.
Using the cash flow statements in Table 5, compare the cash flows of each company and evaluate the changes in the operating, investing and financing cash flows. You should include a justified set of recommendations how the companies can utilise any surplus cash or mitigate negative cash flows from these 3 main types of cash flow activities.
4. Trend Analysis
Based on the common size balance sheet (All items shown as a percentage of total assets) and common size profit and loss statement (all items shown as a percentage of sales), critically assess and discuss the change in assets & liabilities and adjusted net income (after deducting preferred dividends) for each company.
5. Financial Ratio Analysis
Compute the financial ratios (as given in Table 7) for each company for the year 1997. Assess the companies’ efficiency, profitability and liquidity position, as well as their capital structure (financial leverage) over the years. You should include critical discussion of potential reasons that led to these changes and the likely consequences on the organisations.
Harvard style referencing must be used.
9. Overall professionalism
Well written report which is presented in a professional manner. Appropriate headings, logical structure and flow of ideas, clear and coherent language with good grammar and punctuation etc.
Assessment Marking Criteria
Critical Analysis of financial statements (Balance sheet, Income statement and Cash flow)
Evaluation of Common size Balance sheet and Income statement
Assessment of financial ratios
References and Overall professionalism
General Grading Criteria :
An excellent attempt demonstrating a clear understanding of the requirements of the assignment. An impressive demonstration of research, organisation, initiative, analysis and application.
Thorough and critical financial evaluation using key tools.
A high-quality discussion of the proposed strategies are presented where other possible options are also reviewed and rejected
Critical evaluation and specific conclusions are presented.
A good attempt demonstrating a strong understanding of the requirements of the assignment. A good display of research, organisation, initiative, analysis and application.
A good discussion of financial evaluation using key tools.
Good conclusions are presented.
A satisfactory attempt demonstrating an effective understanding of the assignment. Adequate discussion of financial evaluation. Conclusions are satisfactory.
A basic understanding of the assignment and its effect. Research, organisation, analysis initiative and application limited. There is an attempt to conduct financial evaluation and discussion is very shallow if any. Poor conclusions are presented.
Poor understanding of the requirements of the assignment. Possibly some confusion and much irrelevant material. A poor display of research, organisation, initiative, analysis and application.
There are no or very little financial evaluation
Very poor or no evaluation or conclusions are presented.