MBA 520 Final Project Guidelines and Rubric Overview Businesses and other organizations must regularly measure their financial performance and health in order to make operational and strategic decisions affecting the organization’s future. Management professionals utilize income statements, balance sheets, cash flow statements, and a limitless variety of other reports and techniques to evaluate an organization. They also work closely with professionals from departments across the organization—including marketing, human resources, and operations—to ensure that the business runs smoothly and that financial decisions are not made in isolation. For this project, you will use the accounting and finance skills you learned in the course to review the past and current financial performance and health of a global, publicly traded company. Based on that analysis, you will create initial financial projections that forecast the company’s performance under different scenarios and identify internal risks and opportunities in order to begin planning future activities. This assessment addresses the following course outcomes:  Assess organizations’ underlying financial performance and health by analyzing relevant financial statements, variances, ratios, and other financial information  Draw connections between accounting and financial information and the broader organizational context for making integrated business decisions  Assess critical factors driving financial risks and opportunities for informing management priorities  Forecast business performance under different assumptions about inputs and processes using simple financial models  Evaluate the internal costs and benefits of business opportunities for their impact on budgeting and business decisions  Communicate financial analyses clearly and coherently for persuading internal stakeholders of the validity of observations and conclusions Prompt Imagine you are a newly hired manager at a publicly traded, global corporation of your choosing. (Your instructor must approve your choice. You may also choose a non-publicly traded organization, if your instructor verifies that the organization has sufficient financial information available to complete the project.) You have been asked to review the company’s past and current financial performance and health and make initial financial projections in order to begin planning for the upcoming year. Your supervisor is particularly interested in a fresh perspective on what your analysis reveals about potential risks and opportunities, as well as recommendations for next steps. Because you will eventually need to convince internal stakeholders, including senior management, of the feasibility and desirability of your suggested activities, it is important that you justify your projections and recommendations, explaining how they were informed by existing information and modeling different scenarios. Your financial analysis and projection report will include several financial tables, along with a comprehensive narrative describing the organization’s context, financial performance and health, and your analytical approach and conclusions. Your report should be geared toward an executive audience with basic accounting and finance knowledge and should be well organized, clear, concise, convincing, and free of distracting errors. Note that, in addition to the organization’s financial statements and website, other authoritative news sources—such as annual reports and external sites like Bloomberg.com—may offer insights that facilitate analysis or provide information on the organization’s priorities, challenges, and geographic distribution. Specifically, your financial analysis and projection report must include the following critical elements: I. Executive Summary. Clearly and concisely summarize your principal findings, projections, and recommendations with an eye to persuading busy executives to support your ideas and to read further. II. Approach. Provide your intended audience with a solid, but brief, sense of the parameters of your analysis and who else you would consult in refining it further and why. Remember, your goal is to convince readers of the validity of your observations, while recognizing limitations that affect business decisions. III. Financial Performance and Health. In this section, you will evaluate the organization’s recent financial performance and current financial health, given its organizational context. In particular, you must cover: A. Organizational Context 1. What key features of the organization (e.g., major products or services, customers, location, etc.) help set the boundaries for business decisions? In other words, what key goods or services does your organization provide, for whom, where, and why? 2. How is the company organized and managed (e.g., by product groups, geographic region, function, etc.)? How does that affect accounting and financial information and subsequent business decisions? B. Recent Financial Performance 1. Assess what the organization’s consolidated income statements for the last three years say about its financial performance. Use relevant indicators, graphs, and spreadsheets to support your narrative. (Include all spreadsheets in an appendix.) For example, what do the amounts and year-to-year changes in revenue, operating income, net profit or loss, and Earnings Before Interest, Taxes, Depreciation, and Amortization tell you? Do any items stand out? 2. Assess what the organization’s consolidated cash flow statements for the same time period say about its financial performance. Use relevant indicators, graphs, and spreadsheets to support your narrative. For example, what do the amounts and year-to-year changes in cash from operating activities, cash from investing, cash from financing, and total cash flow tell you? Do any items stand out? 3. Assess the organization’s underlying financial performance. Support your answer with the analysis above and relevant research. For example, is recent performance substantially affected by unusual events such as a major acquisition or spin-off? Is the business thriving or struggling in its industry? How do you know? C. Current Financial Health 1. Assess how the organization is capitalized and what that tells you about its financial health. Support your response with relevant graphs, spreadsheets, and indicators such as “cash and cash equivalents,” total debt, shareholders’ equity, current ratio, debt/equity ratio, and Days Sales Outstanding (DSO). For example, does the organization have enough cash for payroll and other bills? Does it have the right mix of debt versus equity (stock)? How do you know? 2. Does the organization have the right amount of cash and other resources (e.g., key people, technologies, reputation, physical assets, etc.) to fuel future growth? What does this suggest for business decisions? For example, if it has too much cash, should it pay a large dividend, repurchase its own shares, or reinvest the excess funds? 3. Assess the financial value of the company using relevant indicators. What does your assessment imply for future business health and performance? For example, what is the business’s current market value? What is its price-to-earnings ratio? What do these suggest about investor perceptions of the business’s future? IV. Success Factors and Risks. Use this section to discuss the factors that may affect current and future performance. Specifically: A. How do the organization’s financial and strategic priorities affect accounting procedures and business decisions? How might that affect business success? For example, is management growth-oriented or efficiency-oriented? What is the organization’s approach to risk and short- versus longterm planning horizons? B. How might the organization better capitalize on non-financial factors such as market share, reputation, human resources, physical facilities, or patents? Support your response with relevant research and analysis. C. What are the most significant internal risks to the company’s financial performance? Give evidence to support your response. For example, is the company vulnerable to technological changes or cyber-attacks? Loss of high-talent personnel? Production disruptions? V. Projections. Based on what you know about the organization’s financial health and performance, forecast its future performance. In particular, you should: A. Project the organization’s likely consolidated financial performance for each of the next three years. Support your analysis with an appendix spreadsheet showing actual results for the most recent year, along with your projections and assumptions. Remember, your supervisor is interested in fresh perspectives, so you should not just replicate existing financial statements, but should add other relevant calculations or disaggregations to help inform decisions. B. Modify your projections for the coming year to show a best- and worst-case scenario, based on the potential success factors and risks you identified. As with your initial projections, support your analysis with an appendix spreadsheet, specifying your assumptions and including relevant calculations and disaggregations beyond those in existing financial reports. C. Discuss how your assumptions, forecasting methodology, and information gaps affect your projections. Why are your projections appropriate? For example, are they consistent with the organization’s mission and priorities? Aggressive but achievable? How would changing your assumptions change your projections? VI. Business opportunities. In this section, discuss the incremental impact of a hypothetical, but reasonable, simple new investment project, such as a new product or facility or a cost-cutting investment, as an initial step in thinking about the future. Be sure to address the following: A. Based on your knowledge of this organization, what is a likely investment it would consider and why? Be sure to describe the basic features of the investment as a foundation for considering its potential financial impact. B. Evaluate the approximate costs and benefits of the investment you identified, explaining how these would affect your spreadsheet projections and business decisions. Estimates are sufficient, but should be grounded in common sense and insight into the organization. C. How does the potential investment affect budgeting and related business decisions? For example, does the investment involve significant cash spending this coming year, followed by benefits in the following year? How might that affect short-term and long-term spending priorities? Does the benefit outweigh the cost? VII. Recommendations. What should you and your manager do next? Support your recommendations with evidence from your financial analysis. For example, should the company pursue the new investment you identified? Implement process changes to decrease risks and/or improve performance? Milestones Milestone One: Financial Performance and Health In Module Three, you will submit your first milestone in which you will evaluate the organization’s recent financial performance and current financial health, given its organizational context. This milestone will be graded with the Milestone One Rubric. Milestone Two: Success Factors, Risk, and Projections In Module Five, you will discuss factors that may affect current and future performance. You will then forecast future performance, based on what you know about the organization’s financial health and performance. This milestone will be graded with the Milestone Two Rubric. Milestone Three: Business Opportunities In Module Seven, you will discuss the incremental impact of a hypothetical, but reasonable, simple new investment project, such as a new product or facility or a cost-cutting investment, as an initial step in thinking about the future. This milestone will be graded with the Milestone Three Rubric. Final Submission: Financial Analysis Projection Report In Module Nine, you will submit your final project. It should be a complete, polished artifact containing all of the critical elements of the final product. It should reflect the incorporation of feedback gained throughout the course. This submission will be graded with the Final Product Rubric. Deliverables Milestone Deliverable Module Due Grading 1 Financial Performance and Health Three Graded separately; Milestone One Rubric 2 Success Factors, Risk, and Projections Five Graded separately; Milestone Two Rubric 3 Business Opportunities Seven Graded separately; Milestone Three Rubric Final Submission: Financial Analysis Projection Report Nine Graded separately; Final Product Rubric Final Product Rubric Guidelines for Submission: Your financial analysis and projection report should be approximately 6–8 pages long (excluding title page, spreadsheets and graphs, and references list). It should be double spaced, with 12-point Times New Roman font and one-inch margins, and should use the latest guidelines for APA formatting for references and citations. Please also include your name, course name, and submission date on the title page. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions. Critical Elements Exemplary (100%) Proficient (90%) Needs Improvement (70%) Not Evident (0%) Value Executive Summary Meets “Proficient” criteria, and response is especially wellsuited for target audience Clearly and concisely summarizes principal findings, projections, and recommendations with an eye to persuading busy executives to support ideas and read further Summarizes principal findings, projections, and recommendations with an eye to persuading busy executives to support ideas and read further, but summary is lengthy, lacks clarity, omits critical details, or contains inaccuracies Does not summarize principal findings, projections, and recommendations with an eye to persuading busy executives to support ideas and read further 5.33 Approach Meets “Proficient” criteria, and response is especially wellsuited for target audience Provides intended audience with a solid, but brief, sense of parameters of analysis and who else would be consulted in refining it Provides intended audience with a sense of parameters of analysis and who else would be consulted, but response is lengthy, lacks clarity, omits critical details, or contains inaccuracies Does not provide intended audience with a sense of parameters of analysis and who else would be consulted in refining it 5.33 Financial: Context: Key Features Meets “Proficient” criteria and draws particularly insightful connections between organization’s financial and non-financial features and business decisions Describes how key features of organization help set boundaries for business decisions Describes how key features of organization help set boundaries for business decisions, but response is cursory, contains inaccuracies, or links to decision making are weak or illogical Does not describe how key features of organization help set boundaries for business decisions 5.33 Financial: Context: Organized Meets “Proficient” criteria and demonstrates especially keen insight into relationships between organization’s structure, how financial information is recorded, and impact on business decisions Analyzes how company is organized and managed and effect on accounting and financial information and subsequent business decisions Analyzes how company is organized and effect on accounting and financial information and decisions, but response is cursory, contains inaccuracies, or links between organizational structure, finance, and decision making are weak or illogical Does not analyze how company is organized and managed and effect on accounting and financial information and subsequent business decisions 5.33 Financial: Performance: Income Meets “Proficient” criteria, and analysis and supporting evidence are particularly wellsuited to drawing meaningful conclusions about financial performance Assesses what consolidated income statements for last three years say about financial performance, supported by relevant indicators, graphs, and spreadsheets Assesses what consolidated income statements say about financial performance, supported by indicators, graphs, and spreadsheets, but response is cursory, contains inaccuracies, or support is not relevant Does not assess what consolidated income statements for last three years say about financial performance, supported by relevant indicators, graphs, and spreadsheets 3.6 Financial: Performance: Cash Flow Meets “Proficient” criteria, and analysis and supporting evidence are particularly wellsuited to drawing meaningful conclusions about financial performance Assesses what consolidated cash flow statements for the same time period say about financial performance, supported by relevant indicators, graphs, and spreadsheets Assesses what consolidated cash flow statements say about financial performance, supported by indicators, graphs, and spreadsheets, but response is cursory or contains inaccuracies or support is not relevant Does not assess what consolidated cash flow statements for the same time period say about financial performance, supported by relevant indicators, graphs, and spreadsheets 3.6 Financial: Performance: Underlying Meets “Proficient” criteria, and assessment is especially nuanced and well supported by relevant analysis and research Assesses underlying financial performance, supported by analysis and relevant research Assesses underlying financial performance, supported by analysis and research, but response is cursory, contains gaps in accuracy or logic, or is poorly supported by analysis and research Does not assess underlying financial performance, supported by analysis and relevant research 3.6 Financial: Health: Capitalized Meets “Proficient” criteria and analysis and supporting evidence are particularly well suited to drawing meaningful conclusions about financial health Assesses how organization is capitalized and what that says about financial health, supported by relevant graphs, spreadsheets, and indicators Assesses how organization is capitalized and what that says about financial health, supported by graphs, spreadsheets, and indicators, but response is cursory or contains inaccuracies or support is not relevant Does not assess how organization is capitalized and what that says about financial health, supported by relevant graphs, spreadsheets, and indicators 3.6 Financial: Health: Growth Meets “Proficient” criteria and demonstrates extraordinary insight into the connections between financial and nonfinancial resources, resource management strategies, and business decisions related to growth Determines whether organization has right amount of cash and other resources to fuel future growth and what this suggests for business decisions Determines whether organization has right amount of cash and other resources to fuel future growth and what this suggests for business decisions, but response is cursory or contains inaccuracies or links between different types of resources and business decisions are weak or illogical Does not determine whether organization has right amount of cash and other resources to fuel future growth and what this suggests for business decisions 5.33 Financial: Health: Financial Value Meets “Proficient” criteria, and assessment and supporting evidence are particularly well suited to drawing meaningful conclusions about future financial health and performance Assesses financial value of company and what it implies for future health and performance using relevant indicators Assesses financial value of company and what it implies for future health and performance using relevant indicators, but assessment is cursory or contains inaccuracies or links to future health and performance are weak or illogical Does not assess financial value of company and what it implies for future health and performance using relevant indicators 3.6 Success Factors and Risks: Priorities Meets “Proficient” criteria, and discussion of how priorities inform management decisions is especially nuanced Determines how organization’s financial and strategic priorities affect accounting procedures and business decisions and the implications for business success Determines how organization’s financial and strategic priorities affect accounting procedures and business decisions and the implications for business success, but response is cursory or contains inaccuracies or links between priorities and business decisions and procedures are weak or illogical Does not determine how organization’s financial and strategic priorities affect accounting procedures and business decisions and the implications for business success 5.33 Success Factors and Risks: Non-Financial Factors Meets “Proficient” criteria and demonstrates extraordinary insight into the ways in which non-monetary factors impact business opportunities Identifies how organization might better capitalize on nonfinancial factors, supported by relevant research and analysis Identifies how organization might better capitalize on nonfinancial factors, supported by research and analysis, but response is cursory, contains inaccuracies, or is poorly supported Does not identify how organization might better capitalize on non-financial factors, supported by research and analysis 5.33 Success Factors and Risks: Risks Meets “Proficient” criteria and provides especially nuanced and well-supported insight into the internal factors that are most significant in driving financial risk Pinpoints most significant internal risks to financial performance, supported by evidence Pinpoints most significant internal risks to financial performance, supported by evidence, but response is cursory, contains gaps in accuracy or logic, or evidence is weak or irrelevant Does not pinpoint most significant internal risks to financial performance, supported by evidence 5.33 Projections: Likely Performance Meets “Proficient” criteria, and projections are especially nuanced and well-supported by evidence and realistic assumptions Projects likely consolidated financial performance for next three years, supported by spreadsheet showing actual results for most recent year, projections, and assumptions Projects likely consolidated financial performance for next three years, supported by spreadsheet showing actual results for most recent year, projections, and assumptions, but response contains inaccuracies or faulty assumptions or omits key details Does not project likely consolidated financial performance for next three years, supported by spreadsheet showing actual results for most recent year, projections, and assumptions 5.33 Projections: Best and Worst Case Meets “Proficient” criteria and demonstrates especially keen insight into the range of possible financial projections, based on reasonable and realistic assumptions Modifies projections to show best- and worst-case scenarios for coming year based on success factors and risks identified, supported by spreadsheet with assumptions and relevant information beyond existing fin