Calculate key financial ratios, operating cash flow, and the sustainable growth rate for a hypothetical company and use those calculations to evaluate the firm’s financial condition and performance.Note: The assessments in this course build upon each other, so you are strongly encouraged to complete them in sequence.SHOW MORE

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  QUESTIONS TO CONSIDER

  To deepen your understanding, you are encouraged to consider the question below and discuss it with a fellow learner, a work associate, an interested friend, or a member of the business community.SHOW MORE

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  RESOURCES

  REQUIRED RESOURCES

  This following template will assist you in formatting and completing your assessment.:

  • Financial Assessments Template [XLSX].

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• ASSESSMENT INSTRUCTIONS

  Demonstrate your understanding of financial concepts by completing the following calculations related to Jones Inc. and then evaluating the firm’s financial condition and performance.To complete this assessment, use the information in the Financial Assessments Template, which is linked in the Resources under the Required Resources heading. Review the financial statements for Jones Inc. and the comparative financial ratios for the year-end review. Enter your calculations and written analysis directly into the template, and show or explain your work where appropriate.Problem 1. Calculate the firm’s 2015 financial ratios for liquidity, activity (asset management), leverage (debt), and profitability.Problem 2. Analyze the firm’s performance from both time-series and cross-sectional points of view using the key financial ratios provided in the template.Problem 3. Calculate the operating cash flow based on your review of the firm’s income statement.

  • How does operating cash flow (OCF) compare to free cash flow (FCF)?
  • Why is the free cash flow so meaningful to management and investors?

  Problem 4. Calculate the sustainable growth rate based on your calculations of return on equity (ROE) and assuming a 60 percent dividend-payout ratio. How can a company increase its sustainable growth rate?Problem 5. Evaluate the firm’s overall financial condition and performance based on your analysis and then address these questions:

  • Is the company improving or deteriorating over this three-year period?
  • How does your ratio analysis justify your interpretation?

  PLEASE SEE THE SCORING RUBIC:

• Financial Statements Scoring Guide

  CRITERIA	NON-PERFORMANCE	BASIC	PROFICIENT	DISTINGUISHED
  Demonstrate the ability to complete a balance sheet, income statement, and cash flow statements.	Does not demonstrate the ability to complete a balance sheet, an income statement, or cash flow statements.	Demonstrates the ability to complete a balance sheet, an income statement, and cash flow statements; however, there are some errors.	Demonstrates the ability to complete a balance sheet, an income statement, and cash flow statements.	Demonstrates the ability to complete a balance sheet, an income statement, and cash flow statements; provides accurate numbers for all of the problems.
  Demonstrate the ability to accurately calculate key financial ratios, including liquidity, activity, debt, and profitability.	Does not demonstrate the ability to accurately calculate key financial ratios.	Demonstrates the ability to calculate key financial ratios, including liquidity, activity, debt, and profitability; however, there are some errors.	Demonstrates the ability to accurately calculate key financial ratios, including liquidity, activity, debt, and profitability.	Demonstrates the ability to accurately calculate liquidity, activity, debt, and profitability; provides accurate numbers for all of the problems.
  Analyze a firm’s performance from both time-series and cross-sectional points of view.	Does not describe a firm’s performance from both time-series and cross-sectional points of view.	Describes a firm’s performance from both time-series and cross-sectional points of view.	Analyzes a firm’s performance from both time-series and cross-sectional points of view.	Analyzes a firm’s performance from both time-series and cross-sectional points of view; includes relevant data to support the analysis.
  Calculate operating cash flow.	Does not calculate operating cash flow.	Calculates operating cash flow, but arrives at an inaccurate result.	Calculates operating cash flow.	Calculates operating cash flow using the appropriate method and interprets the results accurately.
  Explain how operating cash flow compares to free cash flow.	Does not list how operating cash flow compares to free cash flow.	Lists how operating cash flow compares to free cash flow.	Explains how operating cash flow compares to free cash flow.	Explains how operating cash flow compares to free cash flow; includes relevant data to support the explanation.
  Evaluate a firm’s overall financial condition and performance.	Does not analyze a firm’s overall financial condition and performance.	Analyzes a firm’s overall financial condition and performance.	Evaluates a firm’s overall financial condition and performance.	Evaluates a firm’s overall financial condition and performance; includes relevant data to support the evaluation.

  SEE PROFESSOR COMMENTS FROM ASSESSMENT 1:

• OVERALL COMMENTS:

  Sharon – Since this is your first essay assignment, allow me to point out a few things that are appropriate to know and will help you as you approach other essay assignments. First, the rubrics are how you are assessed. Look to these for inspiration and recommended subheadings to ensure you address these must-cover areas of the assignment. Ancillary areas are nice, and may help, but the rubrics tell you what you must do so be sure and know how you will be assessed and directly cover those areas. Next, critical analysis is not a summary of what the author just wrote, but rather analyzing with a critical eye what the author purports to present as truth. You can be persuasive and present your own logical arguments and opinions, but how much more credible those arguments and opinions will be if supported by external research resources that you cite! Be sure and research and use good-quality research. These external research resources give you the bullets to shoot the gun. Per my review a good first draft, but read what I have said above. Develop and use subheadings for each main topics area outlined in the rubric (How you are assessed), List all References used in paper at the end not just some. Ensure paper is fairly evenly-balanced among topics, adding content if needed. Edit and resubmit.

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