Financial Management Report Preparation using Microsoft Excel
. Visit the website of your chosen and approved company and obtain the annual reports for the previous three years. Note: Financial statements are contained within the annual reports. Read the Director’s and/or Chairman’s report as well as other qualitative information about your chosen company. This will give you an idea about the background of the company as well as any highlights. It may also be useful to see if your company is being followed by the media. For example you may find that the Australian Financial Review, the Australian or the Sydney Morning Herald have been writing about your company. The financial reports will give you an internal perspective and any media reporting will start to give you an external perspective from the media’s point of view. 2. Prepare a three year trend analysis for the income statement for the previous three financial years. Perform the analysis in Microsoft Excel. 3. Perform a horizontal analysis for the balance sheet for the previous three financial years. Perform the analysis in Microsoft Excel. 4. Perform a vertical analysis for the balance sheet and the income statement for the previous three financial years. Perform the analysis in Microsoft Excel. 5. Perform a complete ratio analysis for the financial statements for the three previous financial years. Perform the analysis in Microsoft Excel. 6. As a result of your analysis and research on the company, write a report in Microsoft Word which brings all of the above analysis together in a professional format. Your audience is the Chief Financial Officer. In each part of the analysis and overall you will need to provide both an interpretation of the results and a recommendation of the results in the report. Your report should be structured and include the following: – Cover Sheet (signed and dated by all group members) – Table of Contents – Executive Summary – Introduction – Body of the Report 4 – Information about the company and industry and other relevant background information – Trend Analysis, Interpretation and Recommendation – Horizontal Analysis, Interpretation and Recommendation – Vertical Analysis, Interpretation and Recommendation – Ratio Analysis, Interpretation and Recommendation – Overall Analysis, Interpretation and Recommendation (Note: In the overall analysis, interpretation and recommendation you need to bring the individual parts of the analysis, interpretation and recommendation together as a summary of the business and its performance overall) – Limitations of your analysis – Conclusion – References – Appendices (all the calculations conducted in requirements 2.to 5. should be included in the appendix) Please note your report must be referenced. (APA referencing style is to be used). Note: Your report should be typewritten, double-spaced and page numbered. As a guide you should include (but not be limited to) the following in the body of the report: Discuss the nature and overall strategy of the business. Discuss any challenges, opportunities, risks, competition the business faces as a whole moving forward. As an example there may be external factors of the business such as economic factors, social trends etc. that may be present as a challenge or an opportunity moving forward or the sector might be faced by increased competition over the past three years. Identify any areas that you consider to be strengths or weaknesses for your company from its operations based on your analysis of the financial statements. Explain why you have identified these areas as strengths or weaknesses and interpret them. If you identify strengths and weaknesses discuss how the company could improve on the weakness or build on the strength by providing a recommendation. You must be specific in your discussion, do not generalise. For example, this may relate to a growth in debt, an increase in expenses relative to revenues etc. It is the group’s responsibility to look at all aspects of performance and identify what is appropriate for your company. Every company is different and each company will have its own strengths and weaknesses. Your analysis needs to be a critical evaluation, rather than a report that merely restates the results of the analysis. The written report, interpretation and recommendation needs to be justified with reference to the analysis. Your comments should be specific to the company you have chosen, not generalisations. The interpretation will be based on the analysis where you discuss the results and in the recommendation you will discuss the actions your group believes the company should take.As an example it would be insufficient to state that the current ratio decreased as there also needs to be an interpretation and recommendation associated with the analysis. For example, the current ratio may have increased due to an increase in inventory, and the reason for the increase in inventory may be a slowdown in sales which is not good news. In this example the increase in the current ratio does not necessarily mean that liquidity has improved as inventory may not be liquid. Adding the separate elements together you may conclude that given the reduction in sales the recommendation to the business may be that it needs to reduce its levels of inventory by producing less or if a retailer analysing what is and is not selling and work out which types of inventory it needs to hold less of. You also need to critically evaluate the limitations of your analysis. The limitations should be discussed with reference to your company, not generally. Do not include the calculations in the body of the report; they should be included in the appendix by cutting and pasting each part of the analysis (in Microsoft Excel) into the Microsoft Word document.