Reference no: EM133252111 , Length: word count:2200

Overview

Counting cash every day is important to all companies. If we want to know if we can pay bills due tomorrow, next week, next month, and so on, we need to know the amount of cash available, including what will be spent and what will be coming in. If there is an excess, what is the best option? Do you sit on the cash, invest it in short-term instruments, or ask for guidance on what to do? In the short term, there needs to be a plan in place to ensure that the cash obligations of a firm are met and the company's reputation and cooperation with others will not be threatened or interrupted. Developing a short-term plan will help a company successfully achieve its long-term goals. This ongoing process requires continuous attention to detail and an understanding of markets, economy, risk, regulations, technology, society, competition, and political implications.

In this project, you will complete a comparative analysis of two publicly traded domestic firms within the same industry. You will select two companies that meet the identified criteria, and your selections will be approved by the instructor. Using what you have learned in the course and your own research, you will assess the broader economic climate and evaluate the working capital of each firm. Then, after determining which company is not adequately performing, you will provide recommendations for performance enhancement. The product of your inquiry and analysis will be compiled into a comparative analysis paper.

The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Three, Five, and Seven. The final product will be submitted in Module Nine.

In this assignment, you will demonstrate your mastery of the following course outcomes:

- Analyze best practices of core cash flow management for the ethical oversight of current assets and liabilities
- Assess economic climates for their impacts to short-term financial markets and instruments
- Evaluate working capital options and forecasting tools for their potential to improve cash position and profits
- Propose short-term financial recommendations that align to firms' strategic objectives and appropriately manage risk

Prompt
Which of the two selected firms is better positioned in terms of core cash flow management and the likely impacts of the current economic climate on each firm? How would you advise the firm that is currently performing poorly, in terms of improving its cash position, achieving its strategic objectives, and appropriately managing risk?

Specifically, the following critical elements must be addressed:

I. Background: Describe both of the firms and their management, including their strategic objectives. Provide sufficient detail to support the rest of your analysis.
II. Assessment of the Economic Climate

A. Assess the current interest rates for their impacts on short-term financial markets and instruments. Cite specific evidence that supports your conclusions.
B. Assess the current rate of inflation for its impacts on short-term financial markets and instruments. Cite specific evidence that supports your conclusions.
C. Referring to the goal of the Federal Open Market Committee, which is to provide a monetary supply that facilitates constant and moderate expansion of the economy, assess the Federal Reserve's plans (e.g., the likelihood of changes to monetary policy and/or regulations) for their potential impact on short-term financial markets and instruments. Cite specific evidence that supports your conclusions.
D. Examine the ethical (e.g., regulatory, tax) considerations that impact the industry within which your firms operate as a result of Sarbanes-Oxley. To what extent do these realities impact their core cash flow management? Provide specific examples to illustrate.
III. Evaluation of the Firms
A. Analyze both companies' cash flow management practices for the last three fiscal years, including cash, accounts receivables, accounts payable, fixed assets, and inventory. Cite specific examples and figures to illustrate.
B. Analyze both companies' working capital cash flow management practices, including cash, accounts receivables, accounts payables, fixed assets, and inventory. Cite specific examples and figures to illustrate.
C. Evaluate both companies' liquidity. Cite specific examples and figures that support your evaluation.
D. Calculate both companies' financial ratios:
1. Activity ratios, including inventory turnover ratios
2. Debt ratios (financial leverage)
3. Profitability and market ratios
E. Using the financial ratio calculations above, identify strengths and weaknesses for each firm, citing specific examples and figures to support your response.
IV. Conclusions and Recommendations: Using your evaluation, determine which firm is better performing in terms of short-term financial management. For the firm that is not performing well, make the following recommendations for performance enhancement, supporting each with evidence:
A. Indicate which forecasting tools should be used, and defend your claims using specific evidence.
B. Propose specific working capital and borrowing options that align to the firm's strategic objectives.
C. Propose specific financial products that align to the firm's strategic objectives.
D. Explain how your recommendations appropriately address each of your identified risks.

Milestone One: Background and Evaluation

Milestones

In Module Three, you will describe each of the two firms you have selected for your final project, including their management and strategic objectives. Your evaluation of the firms will include an analysis of the cash flow management practices of each company for the last three fiscal years-including cash, accounts receivables, accounts payables, fixed assets, and inventory. This submission will be graded with Milestone One Rubric.

Milestone Two: Assessment of Economic Climate
In Module Five, you will examine current interest rates and rates of inflation, and evaluate the impact of these rates on short-term decisions that must be made for the two firms you are researching for your final project. You will also examine ethical considerations that impact the industry as a result of the Sarbanes- Oxley Act of 2002, including to what extent this act has impacted the core cash flow management of the companies you are researching. This submission will be graded with the Milestone Two Rubric.

Milestone Three: Evaluation: Liquidity, Financial Ratios, Strengths, and Weaknesses
In Module Seven, you will evaluate the liquidity and financial ratios of both companies; using the financial ratio calculations you make, you will identify the strengths and weakness of each firm.

Attachment:- Analysis paper.rar