Business managers are often responsible for the financial transactions and planning
Business managers are often responsible for the financial transactions and planning for a company. In Week 1, you selected a Fortune 500 company or another company you are familiar with. This company will be referred to as “your company” or “the large company you selected in Week 1.”
As the new business manager working for the Chief Financial Officer (CFO) of your company, you want to review historical financial information to be fully informed of your company’s business valuation so you can provide guidance on near future financial decisions. You decide to put together a presentation on your company’s financial performance that assesses the cash flow, valuation, and KPIs for financial stability that you will present at the next management meeting. Your ultimate plan is to write a financial plan that will lead to future company growth.
Using your selected company and research from Week 1, create an 8- to 10-slide presentation to assess the company’s financial growth and sustainability.
Identify 2 key performance indicators.
Relate the stock price to price-to-earnings ratio.
Explain the market capitalization and what it means to the investor.
Identify trends in stock price, dividend payout, and total stockholders’ equity. Relate recent events or market conditions to the trends you identified.
Determine, based on your analysis, whether you think the organization is going to meet its financial goals, describe the outlook for growth and sustainability, and explain why you do or do not recommend this stock for purchase and how your recommendation compares to that of other analysts. For example, if your suggestion is buy, you need to explain why other analysts say sell.
Sample Solution
As the new business manager working for the Chief Financial Officer, I have put together a Powerpoint presentation to assess my company’s financial growth and sustainability. This presentation will be presented at the next management meeting with a goal of creating an effective financial plan that can lead to future company growth.
The first slide focuses on assessing cash flow by looking at key performance indicators such as net income and gross profit margin. Net income is important because it measures how much money is left over after all expenses are taken out and represents how profitable a company is overall. The gross profit margin shows us what percentage of each dollar of revenue turns into profits. Both of these KPIs should be monitored closely to ensure the company is healthy from a cash flow perspective.
The second slide evaluates the stock price in relation to its Price-to-Earnings (P/E) ratio which helps investors decide whether they want to buy stock in this particular company or not. The P/E ratio compares a company’s share price with its earnings per share (EPS). If EPS is higher, then this indicates that investors are willing to pay more for each unit of earnings produced by the firm so they expect higher returns on their investment.
The third slide looks at market capitalization which provides insight into how valuable a company appears based on its total value in terms of market shares outstanding multiplied by current stock prices. Market capitalization gives investors an understanding of how large or small a business is relative to other competitors within its industry, indicating potential future investments.
In conclusion, it is essential for companies like mine to have strong key performance indicators, understand their P/E ratios, and comprehend their overall market capitalization if they wish to remain financially sound and grow into bigger organizations. With proper analysis via these methods combined with strategic planning, my team can craft comprehensive plans that ensure our success both now and going forward.
