Analyze the company’s performance relative to the industry average. The average
ID: 2741991 • Letter: A
Question
Analyze the company’s performance relative to the industry average. The average should refer to the same period as the financial statements being analyzed (or as close as possible). Specifically, you should answer:
1. Why is benchmarking important in analyzing financial statements and evaluating a company’s overall performance? In other words, does analyzing a specific company’s financial statements in isolation provide you with sufficient information for analyzing its overall performance? Why or why not?
2. What do bench marking comparisons tell you about how the selected company is performing relative to industry peers? Support your answer with specific examples from your analysis and industry research.
3. How do your company’s financial statements compare to industry standards in terms of legally and ethically communicating necessary information to stakeholders? Justify your response using specific examples and referencing relevant legal and ethical guidelines.
III. Conclusions. Based on your analysis, what overall conclusions would you draw regarding the following questions?
a) Would outside investors find the company attractive as a potential investment? Why or why not? Use examples from your analysis to support your answer.
b) What simple corrective actions might the company take to improve its financial situation? Support your response using your analysis and relevant course information.
c) What legal and ethical considerations does the organization need to consider in implementing these recommendations? How would these affect stakeholders’ decision making? Support your response referencing relevant legal and ethical guidelines.
Please copy and paste the following to access Google finace
Income Statement Annual
https://www.google.com/finance?q=NYSE%3AF&fstype=ii&ei=GVZwV4HhM4iEsAGTq5WoBA
Balance Sheet
https://www.google.com/finance?q=NYSE%3AF&fstype=ii&ei=GVZwV4HhM4iEsAGTq5WoBA
Cash Flow
https://www.google.com/finance?q=NYSE%3AF&fstype=ii&ei=GVZwV4HhM4iEsAGTq5WoBA
TOYOTA
Income statement annual
https://www.google.com/finance?q=NYSE%3ATM&fstype=ii&ei=g-eHV_GZB4iFjAH-_ISICw
Balance Sheet Annual
https://www.google.com/finance?q=NYSE%3ATM&fstype=ii&ei=g-eHV_GZB4iFjAH-_ISICw
Cash Flow Annual
https://www.google.com/finance?q=NYSE%3ATM&fstype=ii&ei=g-eHV_GZB4iFjAH-_ISICw
Thank you for your help
Explanation / Answer
1. Why is benchmarking important in analyzing financial statements and evaluating a company’s overall performance? In other words, does analyzing a specific company’s financial statements in isolation provide you with sufficient information for analyzing its overall performance? Why or why not?
1. Benchmarking is important to know about the perfomance of the company as it tells the company if it is going as per the standard set by the industry or not, If yes than what are the main contributors of the same can be known, Similarly if not then reasons for the same can be analyzed and problems in the financials as well as the operations of the company can be analyzed. No, if analyzed in isolation to the industry same financials are just a piece of paper representing just a record. It is same as striking a arrow in the dark without any sense of direction or understanding and knowledge.
2. What do bench marking comparisons tell you about how the selected company is performing relative to industry peers? Support your answer with specific examples from your analysis and industry research.
2.Bench marking comparison tells you the average which the industry requires you to achieve if same is not achieved it means that either you are not efficient or you have some external or internal problem due to which perfomance level has not been achievable and trouble shooting of the same is required. Suppose for companies in Automotives require Debt-equity ratio to be 2.5:1 but if general electric is 2.04 then this is bad as per benchmarking, But not only does it depends upon the company but operating Problems company is facing but also the size iin which the company is operating.
3. How do your company’s financial statements compare to industry standards in terms of legally and ethically communicating necessary information to stakeholders? Justify your response using specific examples and referencing relevant legal and ethical guidelines.
3. Company need's to disclose the current contingent liabilties it is facing in the form of Court cases, as well as criminal investigation's it iis facing or debt obligation paid and remaining in the balance sheet or as disclosure in the balance sheet. This information is necessary to be disclosed so that investors get true and fair view of the accounts and finance. what the company is doing and are they behaving like the way they are required to. Is company paying taxes regularly as well as other obligations in the form of timely Dividens and increased shareholders confidence. In the case, of aurthur anderson where the audit was done by them, they Passed the accounts of the company but the company faltered later but, accounts presented were true as per both of the company as well as the auditors, but this was not true as the accounts were window dressed and arthur anderson was forced to withdraw its certificate of practice.
III. Conclusions. Based on your analysis, what overall conclusions would you draw regarding the following questions?
a) Would outside investors find the company attractive as a potential investment? Why or why not? Use examples from your analysis to support your answer.
b) What simple corrective actions might the company take to improve its financial situation? Support your response using your analysis and relevant course information.
c) What legal and ethical considerations does the organization need to consider in implementing these recommendations? How would these affect stakeholders’ decision making? Support your response referencing relevant legal and ethical guidelines.
a.) Yes, outside investors will find the company attractive as company has presented positive returns and industry is automotive which is continuing industry as population will grow as the people will demand more cars and automotive products, like food and barber service these industries have continous demand as well.
b.) Although everything is maintained well by the companies but they need to maintain their cash flow's to a good level as required by the companies and need's to reduce outflow of the cash as these companies have high working capital but as per the analysis most of cash is engaged in other activities as per the same should be improved.
c.) Although, action taken by the ford as presented by the ford company for reducing the dropout percentage in latin countries, does not require any kinds of legal thing until and unless funds are being taken up from the reserves mantained by company to pay-off the equities or debt. But, they will affect the sentiments off the debenture holder's, bank's and other debt payments as well as equity holder's if the organization's are not able to pay them on time, these class of borrower's may ask for pull back of these social actions as done by them.
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