Discussion 1:  Analysis of Financial Statements . A. This discussion assignment will allow for the completion of a ratio analysis.  It will also provide information that will be useful as you prepare the written report for Assignment 1: Financial Research Report, which is due at the end of Week 9. Step 1 : Select a publicly-traded company that you will (or might) use for Assignment 1: Financial Research Report, which is due at the end of Week 9. Step 2 : Locate financial ratio data from Mergent Online.  Financial statements, ratios, and other useful information are available from the Mergent Online database that is available through the Strayer University Learning Resource Center (online).  Please notice that financial ratios are grouped into appropriate categories (Profitability Ratios, Liquidity Ratios, Debt Management Ratios, and Asset Management Ratios), which makes it easy to set up the ratios and use them in the analysis. Accessing the Mergent Online Database – Financial Statements for companies, financial ratios, and Form 10K annual reports can be obtained from the Strayer University Learning Resource Center, which is accessible from the Online Classroom (see tab at the top of the screen). Select – Learning Resource Center Select – Databases Select Mergent Online Then, in the block titled “Company Search – Enter Symbol or Company Name” enter the company’s name or its Stock Ticker Symbol (e.g., for McCormick & Company, enter MKC).  Next, select the company from the drop-down menu. For Financial Statements – Select “Company Financials” tab For Financial Ratios – Select “Company Financials” tab and “Ratios” sub-tab For Form 10K Annual Reports – Select “Filings” tab (and then select the most recent Annual Form 10K report) Step 3 : Enter the financial ratio data into the Financial Ratio Analysis Model (the attached Excel spreadsheet).  The data need to be entered into the yellow-coded cells (column is titled “Oldest Year”) progressing to the most recent year on the left (column is titled “Most Recent Year”). The model presently contains financial information for McCormick & Company (Stock Ticker MKC). You will note that the Excel spreadsheet model is programmed to identify if each ratio improved or deteriorated over the time period.  And, the spreadsheet is programmed to calculate the percentage change in each of the ratios during the same period.  This information should be helpful as you prepare your analysis. (Note: This spreadsheet could be “imported” into the Assignment 1: Financial Research Report due at the end of Week 10.) Step 4 :  Prepare an analysis and discussion of the financial ratio data that are examined in the Financial Ratio Analysis Model.  It is always appropriate to include the actual ratio data in the written analysis in addition to its presentation in a table, chart or graph. (Note: In addition to Mergent, another good source of financial data and company information is:   http://www.advfn.com   .) B. Fr.

1. Discussion 1: Analysis of Financial Statements
.
A. This discussion assignment will allow for the completion of
a ratio analysis. It will also provide information that will be
useful as you prepare the written report for Assignment 1:
Financial Research Report, which is due at the end of Week 9.
Step 1
: Select a publicly-traded company that you will (or might) use
for Assignment 1: Financial Research Report, which is due at
the end of Week 9.
Step 2
: Locate financial ratio data from Mergent Online. Financial
statements, ratios, and other useful information are available
from the Mergent Online database that is available through the
Strayer University Learning Resource Center (online). Please
notice that financial ratios are grouped into appropriate
categories (Profitability Ratios, Liquidity Ratios, Debt
Management Ratios, and Asset Management Ratios), which
makes it easy to set up the ratios and use them in the analysis.
Accessing the Mergent Online Database – Financial Statements
for companies, financial ratios, and Form 10K annual reports
can be obtained from the Strayer University Learning Resource
Center, which is accessible from the Online Classroom (see tab
at the top of the screen).
Select – Learning Resource Center
Select – Databases
Select Mergent Online
Then, in the block titled “Company Search – Enter Symbol or
Company Name” enter the company’s name or its Stock Ticker
Symbol (e.g., for McCormick & Company, enter MKC). Next,

2. select the company from the drop-down menu.
For Financial Statements – Select “Company Financials” tab
For Financial Ratios – Select “Company Financials” tab and
“Ratios” sub-tab
For Form 10K Annual Reports – Select “Filings” tab (and then
select the most recent Annual Form 10K report)
Step 3
: Enter the financial ratio data into the Financial Ratio Analysis
Model (the attached Excel spreadsheet). The data need to be
entered into the yellow-coded cells (column is titled “Oldest
Year”) progressing to the most recent year on the left (column
is titled “Most Recent Year”).
The model presently contains financial information for
McCormick & Company (Stock Ticker MKC).
You will note that the Excel spreadsheet model is programmed
to identify if each ratio improved or deteriorated over the time
period. And, the spreadsheet is programmed to calculate the
percentage change in each of the ratios during the same period.
This information should be helpful as you prepare your
analysis.
(Note: This spreadsheet could be “imported” into the
Assignment 1: Financial Research Report due at the end of
Week 10.)
Step 4
: Prepare an analysis and discussion of the financial ratio data
that are examined in the Financial Ratio Analysis Model. It is
always appropriate to include the actual ratio data in the written
analysis in addition to its presentation in a table, chart or graph.
(Note: In addition to Mergent, another good source of financial

3. data and company information is:
http://www.advfn.com
.)
B. From the scenario, determine two (2) financing strategies
that TFC could utilize to accomplish its expansion goals. You
may, for example, consider your analysis of TFC’s financial
statements, as well as your knowledge of TFC’s excessive cash
position. What is the rationale for your response?
NOTE: THE TFC FINANCIAL STATEMENTS ARE
PROVIDED AS AN “ANNOUNCEMENT” IN THE ONLINE
CLASSROOM.
Financial Ratio Analysis Model 123014.xls
(26 KB)
student post:
This discussion assignment will allow for the completion of a
ratio analysis. It will also provide information that will be
useful as you prepare the written report for Assignment 1:
Financial Research Report, which is due at the end of Week 9.
For this discussion, I decided to complete a financial ratio
analysis model for General Dynamics for the years 2014 thru
2010. A financial ratio analysis consists of profitability,
liquidity, debt management, asset management, and per share
ratios. These ratios tell stakeholders if a company's performance
has deteriorated or improve from one year to the next. This
information is important to stakeholders for several different
reasons. A person who is interested in investing in General
Dynamics can review the company's performance ratios to make
a better-informed decision. Management at a company can also
use this information when deciding how they should further
invest capital into their organization. So let's assume that we
are thinking about investing in General Dynamics. We should
begin by reviewing the financial ratio analysis that I created

4. below to aid us in our decision.
General Dynamics Corp. (NYS: GD)

5. Most Recent Year
Oldest Year
Performance From First to Recent Year;
Profitability Ratios
12/31/14
12/31/13
12/31/12
12/31/11
12/31/10
Shows Percentage Change in Ratios
ROA % (Net)
7.16
6.76
-0.96
7.49
8.25
Performance Deteriorated
-13.21%
ROE % (Net)
19.24
18.21
-2.69
19.03
20.39
Performance Deteriorated
-5.64%
ROI % (Operating)
22.78
21.86
5.12
22.72
24.05
Performance Deteriorated
-5.28%

6. EBITDA Margin %
14.21
13.61
4.18
13.62
13.91
Performance Improved
2.16%
Calculated Tax Rate %
29.69
31.08
161.37
31.36
30.66
Performance Improved
-3.16%
Revenue per Employee
310,070
325,188
340,856
343,607
360,733
Performance Deteriorated
-14.04%
Liquidity Ratios
12/31/14
12/31/13

7. 12/31/12
12/31/11
12/31/10
Quick Ratio
0.95
1.19
1.07
1.1
1.01
Performance Deteriorated
-5.94%
Current Ratio
1.27
1.47
1.35
1.38
1.27
Performance Deteriorated
0.00%
Net Current Assets % TA
10.34
16.06
12.02
12.11
9.25
Performance Improved
11.78%

8. Debt Management
12/31/14
12/31/13
12/31/12
12/31/11
12/31/10
LT Debt to Equity
0.29
0.27
0.34
0.3
0.18
Performance Deteriorated
61.11%
Total Debt to Equity
0.33
0.27
0.34
0.3
0.24
Performance Deteriorated
37.50%
Interest Coverage
45.22
42.85
5.34
27.13
25.13
Performance Improved
79.94%

9. Asset Management
12/31/14
12/31/13
12/31/12
12/31/11
12/31/10
Total Asset Turnover
0.87
0.9
0.91
0.97
1.02
Performance Deteriorated
-14.71%
Receivables Turnover
3.46
3.4
3.35
3.56
3.85
Performance Deteriorated
-10.13%
Inventory Turnover
8.07

10. 9.86
10.39
12.01
12.4
Performance Deteriorated
-34.92%
Accounts Payable Turnover
14.33
13.24
11.72
11.61
12.73
Performance Deteriorated
12.57%
Accrued Expenses Turnover
20.2
18.7
18.35
20.05
20.76
Performance Deteriorated
-2.70%
Property Plant & Equip Turnover
9.15
9.16
9.4
10.45
11.04
Performance Deteriorated
-17.12%
Cash & Equivalents Turnover
6.37
7.26
10.57
12.42
13.32

11. Performance Deteriorated
-52.18%
Per Share
12/31/2014
12/31/2013
12/31/2012
12/31/2011
12/31/2010
Cash Flow per Share
11.12
8.86
7.58
8.89
7.83
Performance Improved
42.02%
Book Value per Share
35.61
41.03
32.2
37.12
35.79
Performance Deteriorated
-0.50%

12. As of December 31, 2014, GD's return on assets (ROA)
deteriorated 13.21% from 2010. GD's ROA deteriorated by
5.9% from 2013 to 2014 to 7.16. However, GD's ROA improved
604% from 2012 to 2013. The ROA industry average in 2014
was 7.18%, which suggests that GD was efficiently using its
assets showing a difference of 0.16%. GD's return on equity
(ROE) deteriorated by 5.64% from December 31, 2010, to
December 31, 2014, but steadily improved from 2012 to 2014
showing a 616% positive move. GD's improvement may indicate
that other companies in the defense/aerospace industry did not
land as many contracts or generate as many sales as GD did
from 2012 to 2014. The ROE industry average in 2014 was
27.5%, and GD's ROE was 19.24%.
GD's quick ratio decreased 5.94% from 2010 to 2014 and 20.2%
from 2013 to 2014. The industry quick ratio average in 2014
was 0.31%, so GD's quick ratio of 0.95 for 2014 suggests that
GD probably had a difficult time turning its inventory into cash
in 2014. The current ratio increased 0% from 2010 to 2014 but
showed a decreased of 13.6% from 2013 to 2014. GD's 2014
current ratio in 2014 was 1.27%. GD's total debt to equity has
increased 37.5% from 2010 to 2014 and 22.2% from 2013 to
2014. GD's total debt to equity ratio was 0.33 in 2014, and the
industry's average total debt to equity ratio was 0.63%. GD's
interest coverage has increased 79.9% from 2010 to 2014 and
increased 5.53% from 2013 to 2014. The industry average
interest coverage ratio in 2014 was 18.42%, which was much
lower than GD's interest coverage ratio of 45.22.
From the scenario, determine two (2) financing strategies that
TFC could utilize to accomplish its expansion goals. You may,
for example, consider your analysis of TFC’s financial
statements, as well as your knowledge of TFC’s excessive cash
position. What is the rationale for your response?
One financing strategy that TFC could utilize to accomplish its
expansion goals would be to apply the rules of depreciation
when purchasing long term assets that they intend to use over a

13. number of years. Depreciation is a method of allocating the
cost of a tangible asset over its useful life for both tax and
accounting purposes (Depreciation, 2016). Depreciating assets
would help during the expansion because it would give TFC
more income on its profit and loss statement and increase assets
on its balance sheet (Murray, 2015). A second strategy that
TFC could utilize would be to do a year over year comparisons
to get an idea of the direction of the company. This strategy
would allow the company to address any concerns that could
cause problems during this expansion.
References
Depreciation. (2016).
Investopedia
. Retrieved January 13, 2016, from
http://www.investopedia.com/terms/d/depreciation.asp
Financial Strength Information & Trends. (2016). CSI Market.
Retrieved January 13, 2016, from
http://csimarket.com/Industry/industry_Financial_Strength_Rati
os.php?ind=201
Management Effectiveness Information & Trends. (2016). CSI
Market. Retrieved January 13,
2016, from
http://csimarket.com/Industry/industry_ManagementEffectivene
ss.php?ind=201
Murray, J. (2015). 5 Ways Depreciation Benefits Your
Business.
About Money
. Retrieved
January 13, 2016, from
http://biztaxlaw.about.com/od/depreciation101/f/grosenondeprec
.htm

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