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In this module, you will complete a two-part Assignment that is submitted over the course of 2 weeks. This week, you will complete and submit Part 1. You will complete and submit Part 2 in Week 5.
For this Assignment, you will act as a consultant hired by the operations director of the Barry Computer Company to do a financial analysis and comparison to the industry. You will conduct a financial ratio analysis to gain a good understanding of the company’s financial performance and will then write up an evaluation of the organization’s financial health, as well as your recommendations for how specific ratios can be improved within the next 3–5 years.
In your report, be sure to include relevant citations from the Learning Resources, the Walden Library, and/or other appropriate academic sources to support your work.
RESOURCES
Be sure to review the Learning Resources before completing this activity.
Click the weekly resources link to access the resources.
To prepare for this Assignment:
- Download the Module 2 Assignment Part 1 Template.
- Using problem 4-23 on pages 143–144 of Fundamentals of Financial Management (Brigham & Houston, 2022), populate the Module 2 Assignment Part 1 file with the necessary information. This will assist you as you develop your report. All formulas are included in the Module 2 Assignment Part 1 file.
- Download the Module 2 Assignment Part 2 Template. Note: Be sure to keep a copy of your completed Assignment this week, as you will be adding to the same file for your Week 5 Assignment.
BY DAY 7
Submit your evaluation of an organization’s financial health based on financial ratios, to include the following:
PART 1: FINANCIAL INFORMATION (2–3 PAGES, PLUS EXCEL SPREADSHEET)
- Calculate the following ratios for the Barry Computer Company using the Excel spreadsheet provided.
| Ratio | Calculation |
| Current | Current Assets/Current Liabilities |
| Quick | Current Assets – Inventories/Current Liabilities |
| Days Sales Outstanding | Receivables/(Annual Sales/365) |
| Inventory Turnover | Sales/Inventories |
| Total Assets Turnover | Sales/Total Assets |
| Profit Margin | Net Income/Sales |
| ROA | Net Income/Total Assets |
| ROE | Net Income/Common Equity |
| ROIC | EBIT(1 – T)/Total Invested Capital |
| TIE | EBIT/Interest Charges |
| Debt/Total Capital | Total Debt/(Total Debt + Equity) |
| M/B | Market Price/Book Value |
| P/E | Price per Share/Earnings per Share |
| EV/EBITDA | (Market Value of Equity + Market Value of Total Debt + Market Value of Other Financial Claims – Cash and Equivalents)/EBITDA |
- Analyze computations to determine which ratios are above and below their industry averages, and for each, provide a brief explanation as to why that might be the case.
- Evaluate the financial health of the organization, including in what areas the organization could improve.
Refer to the Week 4 Assignment Rubric for specific grading elements and criteria. Your Instructor will use this grading rubric to assess your work.
SUBMISSION INFORMATION
Before submitting your final assignment, you can check your draft for authenticity. To check your draft, access the Turnitin Drafts from the Start Here area.
- To submit your completed assignment, save your Assignment as WK4Assgn+last name+first initial.
- Then, click on Start Assignment near the top of the page.
- Next, click on Upload File and select Submit Assignment for review.
