expansion goals

“Analysis of Financial Statements” Please respond to the following:

    • * From the e-Activity, determine why it is sometimes misleading to compare a company’s financial ratios with those of other firms that operate within the same industry. Support your response with one (1) example from your research.
    • * From the scenario, determine two (2) strategies that TFC could utilize to reach its expansion goals. You may, for example, consider your analysis of TFC’s financial statements, as well as your knowledge of TFC’s excessive cash position. Provide a rationale for your response.
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    e-Activity,

    Use the Internet to research instances when a company’s financial ratios did not align with those of other firms that operate within the same industry. Be prepared to discuss

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    FIN534 Week 2 Scenario Script: Financial Statements and Reports, Financial Analysis, Corporate ratios and benchmarking
    Slide # Scene/Interaction Narration
    Slide 1 Scene 1

    •      Linda in her office

    •      Don enters with

    •      Linda’s Phone Rings

    •      End of scene

     

    		 FIN534_2_1_Linda-1:   Hello, I hope you are ready to get started today because Don gave us our first analysis project.  He would like us to review some of TFC’s financial reports.

     

    FIN534_2_1_Don-1:     Hello everyone.  I just came from the accounting department where I was able to get TFC’s balance sheets and income statements for the prior two years.  The accounting department also provided an estimate of TFC’s balance sheet and income statement after the acquisition, considering it occurs.  I would like for you to review the statements and determine the financial strength of our company.  We pride ourselves in having a strong cash base.  We are hoping this project will keep our cash account strong.

     

    Let’s go to the conference room so I can show you the reports and review some of the accounts with you.

     

     

    FIN534_2_1_Linda-2:   (Phone rings)Hello.  (wait a few seconds).  Thank you.  I will be right over.

     

    FIN534_2_1_Linda-3:    Sorry I cannot join you as an important matter came up at one of our facilities.

    FIN534_2_1_Don-2:    Not a problem.  I have faith in our Strayer intern. So, we will review the forms in the conference room.
    Slide 2 Scene 2

    •      In conference room with spreadsheets up

    •      Put the three areas of Balance Sheet on  a slide

    •      Show the formula

    •      Go to next slide

     

    		 FIN534_2_2_Don-1:  So, it looks like this one is all on you.  Here is the balance sheet and the income statements.  I was able to gather the information from the last two years of TFC’s annual report, which you know also includes the statement of stockholders’ equity and the statement of cash flows.

     

    FIN534_2_2_Don-2:  Let’s take a quick look at the Balance Sheet.  It shows a snapshot of TFC as of December 31st of the past two years as well as this year which is an estimated number. It is pretty much showing us what the company looks like at those points in time.  The amounts can change significantly from one day to the next.  For example.if there is a big cash payment, then the cash account will go down overnight!  There are three main areas to a Balance Sheet and they include assets, liabilities, and equity.  The Balance Sheet also says everything should add up or balance and the formula for this is: assets equal liabilities plus equity.
    Slide 3 Scene 3

    •      Don shows Asset account

    •      Go to next slide

     

    		 FIN534_2_3_Don-1:    Assets are what TFC owns and the accounts consist of current and long term assets.  Current assets are typically considered by TFC to be those accounts that will be turned into cash within one year.  The long term assets also known as fixed assets are those that have longer than one year of an expected life on the books.

     

    Now let’s take a look at the other side of the Balance Sheet equation.

     

     
    Slide 4 Scene 4

    •      Don shows Liabilities and Equity

    •      Go to next slide

     

    		 FIN534_2_4_Don-1:      Liabilities are what TFC owes to creditors.  The same understanding applies to current liabilities as they are what TFC will pay in cash in the following year, while long term liabilities are more than a year.  Also accounts payables are those payments that are due to other companies while notes payable are typically due to lending institutions.

     

    FIN534_2_4_Don-2: Equity basically represents the owners of the company and any net income that is not paid out in dividends over time gets transferred into our Retained Earnings account.

     

    Please take some time to look over the balance sheet.

     

    FIN534_2_4_Don-3:   As you can se