Reference no: EM132460822

JWI 531 Financial Management II - Strayer University

Assignment 3: Financial Statement Analysis

Overview
For executives and senior management, financial analysis should be an ongoing pursuit of competitive advantage with the analysis of variances used to gauge whether the corporate strategy is working. There is always one more set of data that can be dissected, one more ratio that can be calculated, one more way to look at the competitive landscape and the opportunities/threats the market presents. Some of the best investments and some of the best strategic moves are made by those who pushed a little further and looked for angles that others had missed.

Our final assignment in the course continues to ask you to use judgment in applying what you have learned about financial statement analysis in this and in previous courses. All financial managers and investors (not to mention, students) must operate in the real world of limited time and resources. You are being given the responsibility to make an informed decision about which metrics are most important in analyzing the financial health of Salesforce.com and its potential as an investment opportunity.

Instructions

To prepare for your letter to the Board:

• Read sections from the Salesforce.com: 2016 Annual Report, which is available in Weeks 8 and 9 of your online course. The sections to read are: "Selected Financial Data"(starting on page 36) and "Management's Discussion and Analysis of Financial Condition and Results of Operations" (starting on page 38).

• Review sections from the analyst report, also found in your online course: "May the Force be With You: Wide-Moat Salesforce.com is the Newest Software Empire". The sections to review are: "The Economics of SaaS and Salesforce.com's Valuation" (starting on page 34), and "Appendix" financial data (starting on page 44).

• You should also use the Financial Statement Analysis Checklist and the Value Investing and Growth Investing Checklist provided in your online course

Use the prompts below to help you write your letter:

Question 1. Begin with a brief recap of your reasons for buying the stock.

• Explain why you consider Salesforce.com to be a value stock or a growth stock. Support your position with reference to at least two categories from the Value Investing Checklist and two categories from the Growth Investing Checklist

Question 2. Summarize key product-specific metrics (see Morningstar Appendix), noting:
• What the ratios (EPS, EBITDA, ROE, ROIC and RONIC) in the Morningstar and Annual Report show
• What ratios need to improve and why
• What Salesforce.com most profitable products and services are
• Which products or services management should increase or reduce investment in and why (be sure to consider market competition and risk in your comments).

Question 3. Conclude your letter with an explanation of your opinion about the company. based on what you have learned about economic moats and your analysis of values, growth and profitability of Salesforce,
• Is Salesforce a "great moat" company, a "good moat" company, or is it time to divest? Why did you come to this conclusion?

Attachment:- Financial Statement Analysis.rar