The primary objective of financial accounting is providing information useful for decision makers, which has been the

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Question:

The primary objective of financial accounting is providing information useful for decision makers, which has been the focus of the class.

You have already been assigned Wendy's to determine if they either recovered from the brink of failure or met their demise. Remembering that financial accounting is supposed to provide information useful for decision making, what information could have been gleaned from reviewing the companies' annual and/or quarterly financial statements during the five years leading up to the failure? Or, what information can we glean from reviewing our company's financial statements from the previous five years?

Ask yourself these questions:

How strong was the company's balance sheet?
How liquid was the company?
How were sales?
How strong were the components of income?
How had expenses lined up year over year? (Has any particular expense increased more than expected?)
What is included in the notes to the financial statements?

When analyzing a company, you cannot learn much information when merely comparing the company to itself, so you must also determine how the company performed in comparison to prior years, as well as how it is performing when compared to competitors. Remember apples to apples comparisons. If you are looking at your companies' 2018 financial statements, you should also be looking at the competitor(s)' financial statements for the same period of time.

Objectives 4.6 and 5.10 provide techniques for analyzing financial statements. However, keep in mind that not all ratios will be relevant for all companies. (Hint: Think of what may be most important to know for the industry in which your company operates.) The video for Objective 4.6 is included in this module.

After you've completed the numerical analysis, please provide a written summary, inclusive of your final determination. Please leverage the information you have already provided in responses to discussion questions for Chapters 1 and 2.

Worth 200 points and 10% of your grade, your project will be measured on the following:

Analysis (includes ratios/analysis selected along with calculation)* You should have an Excel spreadsheet showing where you have spread FIVE YEARS of financial data, inclusive of calculations using formulas. - 40%
Written Communication (grammar and form) - 40%
Overall presentation (i.e. originality and overall layout) - 15%
Supporting documentation* - 5%

*Several websites provide company ratio analysis. If you provide no additional analysis for how said numbers were calculated and your own separate calculation, you will not get any points for the Analysis and Supporting documentation components.