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Module 1 Assignment Instructions for 5Y Financials and Exhibit 5- Common Size Income Percentages
Objective: Collect Balance Sheet and Income Statement data for your 5-Year Financials and calculate common size income percentages to compare the financial performance of your firm for the respective period of analysis.
There should be 5 years of analysis, unless there is no data in SEC-Form 10’s for all those years.
What is the 5Y financials?
Every firm in the list of possible cases for the capstone has a five-year period of analysis. Financial data comes from the Form 10 documents each firm submits to the U.S. Securities Exchange Commision. Form 10 includes Balance Sheets and Income Statements we collect for the Five-year Financials.
For most firms, there are five years of financial information. However, it may be there are only 4 or 3 years available. Just collect all what you can get in Excel.
The 5-Y financials Excel workbook includes six sheets: Balance Sheet, Income Statement with Common Size Percentages, and Financial Ratios you must complete in BUS485A. This Excel also includes three Pro-Forma Income sheets for three strategies that will be done in BUS485B.
Excel workbooks with the 5-Y financials for some firms are already available for you to customize in Course Resources/5Y Financials.
What is the Common Size Percentages?
Common size percentages are metrics to compare firm performance over the five years of analysis. All items in the income statement are presented as percentages of Sales or Revenue. For instance, when total costs are expressed as a percentage of sales, and it goes up from 43% to 49%, we could conclude costs have increased over time and we should research why costs went up. Is this because of internal or external factors?
What do you have to do?
After having chosen your firm of study, verify if there are already 5-Year financials for that firm in Course Resources. If it is, verify the data is correct with the Balance Sheet and Income Statement data in SEC-Form10 for the years of your analysis.
If there is no 5-Year financials Excel in Course Resources, you must create one using Form 10 for your period of analysis. Collect Balance Sheet and Income Statement annual data. Depending on your Excel skills, you should request help from your instructor to create formulas and the sheets for common size percentages, financial ratios, and Pro-Forma.
Use the template for Exhibit 5 – Common Size Percentages
Use the TemplateSA-EXH 5-CommonSize.xlsx to guide your work. This template shows the income statement for five years, and the common size percentages calculated to the right. Review how formulas are created for the 1993 common size percentage column, G8 to G27. These formulas were copied to the other years to the right. Because, when you use formulas in Excel, you just type one time, and then you copy it to generate the entire table! You must do the same in your 5Y-financials, sheet Income Statement.
Module 2 Assignment Instructions for External Factor Analysis Summary (EFAS)
Objective: Develop an External Factors Analysis Summary (EFAS) for your selected case study following the guidance in Chapter 4.
There should be 5 strategic factors for Opportunities and 5 strategic factors for Threats.
What are external factors?
External factors are those the firm has NO control over. I will be doing reality checks when reading your work, asking, “Does the firm control this activity or not?” For instance, a firm has control over the price it chooses to charge, but they don’t have control over whether or not that price is acceptable to the ultimate consumer.
What do you have to do?
Fill in the table in TemplateSA-EXH 1-EFAS.docx available in this location and Course Resources. The table has five columns: External Factors, Weight, Rating, Weighted Score, and Comments.
Use short names for the factors, but flesh them out in the comments so they make sense when you approach them later on.
The textbook is clear enough to work on all columns but the Comments. Your comments make all the difference in the quality of the EFAS.
Use the template for Exhibit 1 – EFAS
Use the Template EFAS as the template for your work. Ensure that your format displays correctly and is readable. Do NOT copy from the text or from the Template EFAS text! Use your own critical analysis and critical thinking. The template is provided to assist you with the layout–i.e., make it easy for you to construct the chart. The template also gives you a good idea of the appropriate explanations required in the Comments blocks about the why an SF, potential quantified impact, how weighted, and how rated.
Comments Column
Comments are expected to be 4-5 sentences in length and depth and offer a clear explanation of the strategic factor (SF) in 4 aspects:
Why it is a strategic factor (SF); (1-2 sentences only)
A quantified estimate of the potential impact (QPI) of the SF; (1 sentence only)
How you assign the weight; (1 sentence only) and
How you assign the rating. (1 sentence only)
Section I to III only
Writing Instructions
Level of detailed discussion and analysis: Your prose needs to be in sufficient detail to demonstrate your business knowledge, critical thinking, and critical analysis abilities. One-line statements do not show nor demonstrate satisfactory business knowledge. Bullets do not show nor demonstrate satisfactory business knowledge. Your writing needs to expand on each point in a paragraph where you discuss and analyze the important elements of that particular SA item. See Lecture Reading 4.6 in Module 4/Voluntary Readings for some examples of demonstrated critical thinking, critical analysis, good discussion/analysis for your paragraphs. Make your paragraphs good complete detailed discussion and analysis….. Not one-liners. Do not copy from the textbook.
Formatting and Admin of the SA: Single space your SA with the appropriate line spacing between parts, sections, and paragraphs. Extra line spacing is a serious detractor. Follow the alphanumeric paragraph structure as in the text’s SA and as shown in the SA Paragraphing Structure Template and the Expanded Paragraph View for sections VI, VII, and VIII document. Do not use bullets. Use font size 10-12. Use Portrait page mode for your SA text – do not use Landscape page mode for your SA text. Use single space of 1.0 – do not use 1.15, nor 1.5.
Use the SA Writing Template in Course Resources.
For Section I: Current Situation:
For the paragraph on the Current Posture, discuss how the company is doing currently in terms of revenues, profits, market share, etc. This is a big picture look at how the company is doing.
For the paragraph on Strategic Posture, state the current mission, talk about how the company is doing on its corporate, business, and functional objectives, talk about the company’s strategy or a mix of strategies, and talk about the company’s current policies. See page 32, Appendix 1. A for some good questions to evaluate and analyze in this paragraph.
For Section II: Strategic Managers:
For the paragraph on the Board of Directors (BOD), talk about who is on the BOD, how the BOD is organized, what are the important experience, knowledge, skills, background, and connections the BOD members bring, and what is their involvement and performance in the strategic management of the firm. See pages 32-33, Appendix I. A for some good questions to work on. Just listing the BOD members is not a good way to show your analytical abilities.
For the paragraph on the Top Management, talk about who the top managers are, how they are organized, what are the important experience, knowledge, skills, background, and style the top managers have, and what is their involvement and performance in the strategic management of the firm. See page 33, Appendix 1. A for many good ideas to consider. Just listing some of the top managers is not a good way to show your analytical abilities.
For Section III: External Environment:
This paragraph covers the current status of the external environment facing the company. Don’t talk about what the firm should or could do or might do in the future about these external factors. Keep focused on what is facing the company now in the external environment.
Cover the many factors in the External Environment that you discovered as you analyzed and evaluated the case study. You need to discuss and analyze the 10 Strategic Factors from the EFAS (O1, O2, O3, O4, O5, T1, T2, T3, T4, T5) and any other external factors that are important to a good complete discussion about the external environment that your company is facing. Be sure to put in the EFAS SF tags (O1, O2, T1, T4, etc) at the sentence or paragraph where you discuss/analyze those most important 10 SF from the EFAS. Be sure to put in an O or a T when you discuss other factors of importance. This is your place to shine with your analytical abilities in your discussion and analysis of the factors facing your company. Do a good complete discussion and analysis.
For the Task Environment, be sure to cover the 6 elements of Porter’s methodology of competitive forces. See pages 108-112 in the text.
Your Summary in paragraph D should summarize the most important external strategic factors facing the company.
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