BUS 8003 Fin Assess Rep O&G - April 2023

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University of Arkansas *

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Feb 20, 2024

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BUS 8003 Managerial Finance Financial Assessment Report Overview and Guidelines Project Overview: Each student will conduct a financial assessment of a small to medium-sized business in a quasi-intervention process. This process will entail a deep dive into the financial operations of the subject business which will be reported in a comprehensive assessment report due at the end of the class. Criteria for the Business (subject of the research intervention): For-profit business that has achieved and maintained profitability for the last three years. Company must be a publicly traded business registered with the Security Exchange Commission (SEC). Annual net revenues for the company must not exceed S5 billion in any of the three previous years. The company must be headquartered in the United States and financial statements reported in U.S. dollars. The company may conduct international operations. The company must have a positive net worth in all of the three years considered in the analysis. Project Process and Key Milestones: By the end of week 3: students must select the identity of their subject company (10 pts.) by completing and posting the worksheet in Connect. Students that do not enter a company by the end of week 3 or enter a company that does not meet the criteria will not earn any points. A formal written report following the assignment guidelines must be posted in Blackboard by the end of the class (100 pts.). Assessment Elements, Questions and Recommendations to Address/Include: Organizational Elements Provide a brief historical overview and profile of the company. Discuss the products, services and industry the company operates within and the scope of their geographical reach. Explain how the company conducts their financial operations within the organization structure. Identify the key positions responsible for financial management. Provide an organizational structure indicating the manner in which financial operations are conducted and the key positions associated with this function. Financial Statements and Ratio Analysis Provide three years of financial statements: Income Statement and Balance Sheet. Construct common size ratios to conduct trend analysis for the Income Statement and Balance Sheet for the three years in question. Provide a pro forma forecast for the next 12 months using the methods from the demonstration case in chapter 3.

BUS 8003 Managerial Finance Financial Assessment Report Overview and Guidelines e Complete comprehensive ratio analysis for the three years based on longitudinal (time series) and industry comparisons, using the ratios from table 2.4 and other relevant industry ratios. e Identify and discuss the prevailing trends for the company and comparative strengths, weaknesses, challenges and opportunities identified in the analysis. Where possible, research the cause of surprising or counter-intuitive data. e List and support your recommendations based on review of the historical financial statements and ratios. Growth and Sustainable Growth e (Calculate the company’s sustainable growth rate over the last three years and compare to actual growth during this period using the PRAT model from chapter 4 (present this information through a table or chart). e Compare how the company’s historical growth aligns with sustainable growth and what efforts the company has utilized to close the gap between the two. e Discuss the company’s historical, current and evolving dividend policy. e Assuming the company’s growth follows recent trends, identify the challenges the organization encounter and provide recommendations the company should follow to balance actual and sustainable growth. e Address whether the company should seek to acquire growth through a merger or acquisition and explain defend your reasoning. Capital Structure e Identify the specific debt and equity instruments associated with the company’s financial structure. Describe the characteristics and elements of each financial instrument. e List the specific sources of capital you recommend the company employ to finance future operations and your rationale for these recommendations. e Provide the company’s beta for equity and assets. (Note: Equity betas are widely available and can be used to calculate asset betas through the unlevering process exemplified in the Chapter 8 Appendix). e Provide the company’s Weighted Average Cost of Capital (WACC) using proper finance methods. Evidence your findings. (Note: Use historical interest rates for cost of debt and Capital Asset Pricing Model (CAPM) for cost of equity. Ensure assumptions for CAPM are supported through current market values). e Provide recommendations for changes in the company’s capital mix and your rationale for such changes. Mergers and Acquisitions e Identify any past mergers and acquisitions. e Explain the reasons for the business combinations.

BUS 8003 Managerial Finance Financial Assessment Report Overview and Guidelines Valuation Identify and support the company’s reasonable value if it were liquidated today and ceased operations. Using at least three appropriate methods (at least two, must be use time of value of money principles), estimate the company’s current value as a going concern. Ildentify whether the company seems to be currently over or under valued by the market. Provide recommendations and support for mergers, acquisitions and restructuring. Other Requirements: Use APA 7t edition format where possible. Document and cite all sources your relied upon in your report. Include an Executive Summary at the beginning and Conclusions and Recommendations at the end of the report. The Executive Summary should be no more than one page and provide a condensed but specific summary of your key findings and recommendations. Submit a self-contained and comprehensive report as a word document that includes all tables and figures to support your respective analysis. Tables and figures of less than one page should be placed within the body of the report near their respective discussion. Tables and figures that are more than one page should be placed in the Appendixes section of the report and referred to in their respective discussion. Also, separately submit an Excel document to evidence the calculations and support the tables, graphs and figures in your report. Reports should be well organized, concisely written and make generous use of visual devices (graphs, tables, charts and other visuals). See rubric for assessment guidelines. You must receive a passing grade (in excess of 60%) on the report to pass the class. Students that do not receive a passing grade on this assignment or fail to submit the assignment will receive a failing grade for the class.

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