Step 1: Prepare for the Project

In two weeks, you will meet with your team to discuss the main reasons for LGI\’s reduced operational efficiency. You need to prepare for the meeting by reviewing how to perform financial analysis, including common-size, cash flow, and ratio analysis. Log into O\’Reilly by following these instructions before accessing the chapters and completing the required reading.

Required Reading

Parrino, R., Kidwell, D. S., & Bates, T. W. (2012). Fundamentals of Corporate Finance (2nd ed.). Wiley.

Chapter 3: Financial Statements, Cash Flows and Taxes

• Section 3.1 to 3.6

Chapter 4: Analyzing Financial Statements

• Section 4.1 to 4.6

Step 2: Review and Practice

Maryland Creative Solutions (MCS) has provided you with background material on how its teams approach financial analysis. Using the Project 1 Review and Practice Guide , review the structure and purpose of the income statement and balance sheet. Make sure you also are familiar with the DuPont equation as well as these five groups of financial ratios: liquidity, efficiency, leverage, profitability, and market value. Study how to perform common-size and cash flow analyses. Finally, apply what you have learned so far by completing the exercises referenced in the Project 1 Review and Practice Guide.

You must review the material provided by MCS and do the practice exercises so that you are

• prepared to have informed discussions with your team about company financial statements,
• understand what the statements reveal about operational efficiency, and
• can use this information to make recommendations for improvements.

Complete this review and practice by the end of Week 1. 

Step 3: Participate in the Required Project 1 Discussion

You have finished reviewing the material and performing the exercises but you have some questions. Participate in the Project 1 class discussion. Respond to the two questions below by posting in the discussion; then, respond to two of your classmates\’ discussion posts by the end of the week. 

Discussion

Answer the following questions:

1. Discuss the concepts that were most challenging for you in the readings and review material. How did the practice exercises help clarify these?
2. What did you learn that will help you analyze LGI\’s financial statements?

Before you participate in the discussion activity read the MBA discussion guidelines.

Step 4: Complete the Analysis Calculation for Project 1

To help you analyze LGI\’s financial situation so that you can make recommendations for improvement, you receive an Excel workbook containing the company\’s key financial statements. After performing the ratio, common-size, and cash flow analyses, submit your initial findings.

Complete the analysis calculation for the project:

• Download the Project1ExcelWorkbook_100121 , click the Instructions tab, and read the instructions.
• Perform ratio, common-size, and cash flow analyses using the Income Statement and Balance Sheet worksheet in the Excel workbook.
• If you would like instructor feedback on this step, follow the instructions below to submit your Excel file to the Assignments folder as a milestone by the end of Week 1. This is optional. If you choose to submit the milestone, you will receive instructor feedback. To distinguish the milestone submission from the file you will submit in Step 5, label your file as follows: P1_milestone_lastname_Calculation_date

Take Action

Submit your assignment to your instructor for review and feedback.

Follow these steps to access the assignment:

• Click My Tools in the top navigation bar.
• Click Assignments.
• Select the relevant assignment.
• You should use the comments your instructor made about your optional milestone submission to revise your calculations as needed. Next, proceed to Step 5, where you will answer questions about your analysis, make recommendations for the client, and compile and submit your final report.