1. Week 3 Team Exercise
“Financial Trend Analysis”
BMGT 495
Professor Robert Glenn

2. Financial trend analysis can be a
powerful strategic analysis tool
• Data is easily available for publicly-traded companies in library
databases, annual reports, etc.
• Financial trends provide clues to underlying performance
drivers, issues; help define time-based cause-effect linkages
• Raises questions for further analysis of internal or
environmental factors
• Summary picture of financial condition will be critical to
defining strategic options (SPACE matrix, etc.); financial
constraints may limit strategy options
2

3. Finance Checklist
• Trends in sales, margins, net income, and
key financial ratios?
• Comparison to industry norms?
• Comparison to key competitors?
• Sufficient working capital?
• Good investor relations?
• Overall financial strength?
3

4. Week 3 Team Exercise
• The following slides summarize six-year financial
trend for five different companies (revenue, gross
margin, net income)
• Based on your team’s analysis of these trends, can
you identify the likely factors driving each company’s
financial performance trends?
• Summarize your conclusions in the collaborative
documents section of your Study Group, using the
title “Week 3 Team Exercise”.

5. Company “A”
Revenue
($)
Gross
Margin
(%)
Net
Income
(%)
2005 2006 2007 2008 2009 2010
5

6. Company “B”
Revenue
($)
Gross
Margin
(%)
Net
Income
(%)
2005 2006 2007 2008 2009 2010
6

7. Company “C”
Revenue
($)
Gross
Margin
(%)
Net
Income
(%)
2005 2006 2007 2008 2009 2010
7

8. Company “D”
Revenue
($)
Gross
Margin
(%)
Net
Income
(%)
2005 2006 2007 2008 2009 2010
8

9. Company “E”
Revenue
($)
Gross
Margin
(%)
Net
Income
(%)
2005 2006 2007 2008 2009 2010
9