FIN 325 Final Project Milestone Two Guidelines and Rubric

Overview: The final project for this course is the creation of a financial statement analysis. A business’s financial statements offer important insights into its performance and financial health that help guide internal managers’ and external investors’ resource allocations. For a financial analyst, being able to accurately read and interpret these statements is a critical tool in making sound recommendations to clients or company executives. Analysts also need to understand how the limitations of these statements and the legal and ethical obligations that underpin them impact business decisions.

Prompt: In this milestone, you will submit a draft of a portion of the analysis step (Part II), Section D: Vertical Analysis and Section E: Horizontal Analysis. You will review and compute three years of vertical and horizontal analyses of the approved company you selected in Milestone One. In the vertical analysis, you will measure performance over the most recent three years against one variable: revenue in the income statement and assets in the balance sheet for those years. The horizontal analysis measures trends over the most recent three years and is a strong gauge of growth and consistence.

Specifically, the following critical elements must be addressed:

II. Analysis. Use this section to present your findings based on quantitative and qualitative analysis of the financial statements. Include a copy of the financial statements and any ratios or analysis in an appendix as support for your discussion. In particular, this section should cover:

• Vertical Analysis. Perform a vertical analysis of the income statement and the balance sheet from the most recent three years in order to answer the following questions. Be sure to include supporting calculations and a vertical analysis spreadsheet in an appendix.
  • Do any items in your vertical analysis stand out? Why or why not? Be sure to provide specific examples and explain what elements you considered in arriving at your answer.
  • What does your vertical analysis suggest for managing the company’s financial health? Be sure to justify your response. For example, are there things the company might want to look at more closely? Why or why not?
  • What does your vertical analysis suggest with respect to how potential investors would view the company? Justify your response. For example, are there items that might make potential investors less likely to buy the company’s stock? Are there items that might make potential creditors wary about lending to the company? Why or why not?
• Horizontal Analysis. Perform a horizontal analysis of the same key performance measures covered by your vertical analysis to examine trends for the company over the most recent three-year time period. Use your analysis to answer the following questions and include supporting calculations and horizontal analysis spreadsheet in an appendix.
  • Do any items in your horizontal analysis stand out? Why or why not? Be sure to explain what elements you considered in arriving at your answer.
  • What does your horizontal analysis suggest for managing the company’s financial health? Be sure to justify your response. For example, are there things the company might want to look at more closely? Why or why not?
  • What does your horizontal analysis suggest with respect to how potential investors would view the company? Justify your response. For example, are there any items that might make potential investors less likely to buy the company’s stock? Are there items that might make potential creditors wary about lending to the company? Why or why not?

Guidelines for Submission: Your paper must be submitted as a 2–3 page Microsoft Word document with double spacing, 12-point Times New Roman font, oneinch margins, and at least two sources cited in APA format. Include all relevant and supporting appendices, including financial statements and analyses.

Rubric

Critical Elements	Proficient (100%)	Needs Improvement (75%)	Not Evident (0%)	Value
Analysis: Vertical Analysis: Stand Out	Analyzes items that stand out from threeyear vertical analysis of the company’s most recent financial statements, justifying response, including specific examples and elements considered in arriving at answer	Analyzes items that stand out from vertical analysis but does not justify response, including specific examples and elements considered in arriving at answer	Does not analyze items that stand out from three-year vertical analysis of company’s most recent financial statements	15
Analysis: Vertical Analysis: Managing	Analyzes what vertical analysis suggests for managing the company’s financial health, justifying response	Analyzes what vertical analysis suggests for managing the company’s financial health but does not justify response or response contains inaccuracies or omits critical details	Does not analyze what vertical analysis suggests for managing the company’s financial health	15
Analysis: Vertical Analysis: Potential Investors	Assesses what vertical analysis suggests with respect to potential investors’ view of company, justifying response	Assesses what vertical analysis suggests with respect to potential investors’ view of company but does not justify response or response contains inaccuracies or omits key details	Does not assess what vertical analysis suggests with respect to potential investors’ view of company	15
Analysis: Horizontal Analysis: Stand Out	Analyzes items that stand out from threeyear horizontal analysis of company’s financial statements, justifying response, including elements considered in arriving at answer	Analyzes items that stand out from horizontal analysis but does not justify response, including elements considered in arriving at answer, or response contains inaccuracies or omits critical details	Does not analyze items that stand out from three-year horizontal analysis of company’s financial statements	15
Analysis: Horizontal Analysis: Managing	Analyzes what horizontal analysis suggests for managing the company’s financial health, justifying response	Analyzes what horizontal analysis suggests for managing the company’s financial health but does not justify response or response contains inaccuracies or omits critical details	Does not analyze what horizontal analysis suggests for managing the company’s financial health	15
Analysis: Horizontal Analysis: Potential Investors	Assesses what horizontal analysis suggests with respect to potential investors’ view of company, justifying response	Assesses what horizontal analysis suggests with respect to potential investors’ view of company but does not justify response or response contains inaccuracies or omits key details	Does not assess what horizontal analysis suggests with respect to potential investors’ view of company	15
Articulation of Response	Submission has no major errors related to citations, grammar, spelling, syntax, or organization	Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas	Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas	10

Earned Total

100%