1. Unit 4 GP Chat

2. Topics Covered in this chat
Hints and tips for completing the Unit 4 GP assignment
How to navigate financial websites like msn money and morningstar.com
How to interpret ratios, compare to industry average and improve performance: Profit as percent of sales, current ratio, debt to equity ratio, ROE
How to read the financial statement of an NPO and determine financial status

3. Unit 4 IP Portion Assignment
Individual Portion:
Use to find financial ratios for any "for profit" company in the computer hardware industry (SIC Code 3571 ELECTRONIC COMPUTERS).
Complete a ratio analysis for that company's last year's financial data. At a minimum, list and discuss the company performance vs. its industry average for these 4 ratios:
Profit as percent of sales
Current ratio
Debt to equity ratio
ROE
Comment on
how these ratios depict the financial health of this company as compared to the industry average.
what the company might do to get better in each area.
Make sure you upload the individual portion of this assignment to your individual drop box.

4. Unit 4 IP Portion Assignment
For the individual portion of this assignment you may choose any publicly traded, domestic company. Your ratio format may use the format below:
Company X
Industry Avg.
Profit as percent of sales
Current ratio
Debt to equity ratio
ROE

5. Unit 4 GP Portion Assignment
Given the metrics your accountant told you are evaluated in nonprofits, you asked her to educate you on how to assess the health of a nonprofit. You asked her the following:
Review the financial statements for the Utah Symphony for the years ended August 31, 2008 and 2007 (you can find the annual report under the Learning Materials)
In a report of 500–600 words, comment specifically on the following:
What is the major source of the change in net assets that occurred in 2007 from the change that occurred in 2008? In your opinion, is this trend likely to continue? Why/why not?
If we assume that program expenses of the symphony should generally vary with ticket revenues, do they vary between 2007 and 2008? What could your answer indicate may be happening?
Is investment income a significant part of total sources of revenue in 2007 or 2008? Does this indicate a major concern about the reduction in the fair market value of investments between 2007 and 2008?
Based on your analysis above and any other analyses, comment on the future economic viability of this organization.
Make sure you upload one (1) submission for the group and upload this submission to the group drop box. Please upload the team evaluation form to your individual drop box in order to maintain confidentiality.

6. Grading Rubric Grading Criteria Individual Portion 10% 0-20 pts
Complete a ratio analysis for that company's last year's financial data. At a minimum, list and discuss the company performance vs. its industry average for these 4 ratios:
Profit as percent of sales
Current ratio
Debt to equity ratio
ROE
15%
0-30 pts
Comment on how these ratios depict the financial health of this company as compared to the industry average.
Comment on what the company might do to get better in each area.
Group Portion
What is the major source of the change in net assets that occurred in 2007 from the change that occurred in 2008? In your opinion, is this trend likely to continue? Why/why not?
If we assume that program expenses of the symphony should generally vary with ticket revenues, do they vary between 2007 and 2008? What could your answer indicate may be happening?
Is investment income a significant part of total sources of revenue in 2007 or 2008? Does this indicate a major concern about the reduction in the fair market value of investments between 2007 and 2009?
Based on your analysis above and any other analyses, comment on the future economic viability of this organization.

7. Navigating financial websites

15. Shows the percentage of net profit generated by each sales dollar
Profit margin
Net income
Net sales
Shows the percentage of net profit generated by each sales dollar
Current Ratio
Total current assets
Total current liabilities
Measures ability to pay current liabilities with current assets. As a general rule, a current ratio of 1.5 or greater is normally sufficient to meet near term operating needs
Debt to equity ratio
Total liabilities
Stockholder’s equity
Compares the amount of debt financing to amt of equity financing.
Debt to Equity Ratio is also referred to as Debt Ratio, Financial Leverage Ratio or Leverage Ratio.
The debt to equity (debt or financial leverage) ratio indicates the extent to which the business relies on debt financing.
Upper acceptable limit of the debt to equity (debt or financial leverage) ratio is usually 2:1, with no more than one-third of debt in long term.
A high financial leverage or debt to equity ratio indicates possible difficulty in paying interest and principal while obtaining more funding.
The financial leverage or debt to equity ratio is included in all of our ratio calculating programs, which provide formula, definition and calculation of each ratio.
Rate of return on equity
Ave stockholders equity
Gauges how much net income is earned with the money invested by common shareholders

16. Walgreen Company (WAG) Balance Sheet
Fiscal year ends in August. in millions
Current assets
Liabilities and stockholders' equity
Cash
Liabilities
Cash and cash equivalents
1,880
1,556
Current liabilities
Short-term investments
Short-term debt 12 13
Total cash
Accounts payable
4,585
4,810
Receivables
2,450
2,497
Taxes payable 73
674
Inventories
7,378
8,044
Accrued liabilities
2,763
2,586
Other current assets
214
225
Other current liabilities
Total current assets
11,922
12,322
Total current liabilities
7,433
8,083
Non-current assets
Non-current liabilities
Property, plant and equipment
Long-term debt
2,389
2,396
Land
3,471
3,545
Deferred taxes liabilities
318
343
Fixtures and equipment
5,642
5,989
418
Other properties
5,906
6,300
Pensions and other benefits
396
Property and equipment, at cost
15,019
15,834
Other long-term liabilities
1,735
971
Accumulated Depreciation
(3,835)
(4,308)
Total non-current liabilities
4,442
4,524
Property, plant and equipment, net
11,184
11,526
Total liabilities
11,875
12,607
Goodwill
1,887
2,017
Stockholders' equity
Intangible assets
1,114
1,212
Common stock 80
Other long-term assets
168
377
Additional paid-in capital
684
834
Total non-current assets
14,353
15,132
Retained earnings
16,848
18,877
Total assets
26,275
27,454
Treasury stock
(3,101)
(4,926)
Accumulated other comprehensive income
(111)
(18)
Total stockholders' equity
14,400
14,847
Total liabilities and stockholders' equity

17. Walgreen Company (WAG) Income Statement
Fiscal year ends in August. in millions
Revenue
72,184
Cost of revenue
51,692
Gross profit
20,492
Operating expenses
Sales, General and administrative
16,561
Other operating expenses
(434)
Total operating expenses
16,127
Operating income
4,365
Interest Expense 71
Other income (expense)
Income before income taxes
4,294
Provision for income taxes
1,580
Net income from continuing operations
2,714
Net income

18. Walgreens
WAG
Industry Average
Profit margin
Net income
2,714
3.76%
3.74%
Net sales
72,184
Current Ratio
Total current assets
12,322
1.52%
1.6%
Total current liabilities
8,083
Debt to Equity Ratio
Total liabilities
12,607
0.85%
0.25%
Stockholders equity
14,847
Return on Equity
18.56%
12.84%
Ave Stockholders Equity
14,624

19. Stakeholders view Liquidity Solvency Profitability
Management Efficiency

20. Conclusion We now know how to navigate the financial analysts websites
We looked at profit margin, current ratio, debt to equity ratio and return on equity
Remember that the Utah symphony financial statements are available under the Learning materials

21. Questions