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In preparation for the Week 4 Summative Assessment, compare and evaluate the performance of the market and the Fortune 500 company selected in week one. Assess the market and the company’s performance between 2021 and 2022.

 

In a 1- to 2-page chart, compare your company’s 2021 and 2022 financial reports (income statement and balance sheet) with the market conditions from 2021 and 2022. At a minimum, consider the following market conditions:

 

Interest rates
Federal Reserve Bank
Monetary policy changes
Other market conditions relevant to the Fortune 500 company studied in our class that you selected in week one.

Sample Solution

Financial Comparison of Company and Market Conditions

Category 2021 2022 Market Condition
Interest rates 0.08% 0.75% Interest rates increased significantly in 2022.
Federal Reserve Bank Accommodative Tightening The Federal Reserve Bank shifted to a more restrictive monetary policy in 2022 in an effort to combat inflation.
Monetary policy changes Quantitative easing Quantitative tightening The Federal Reserve Bank began to taper its asset purchases in November 2021 and initiated quantitative tightening in June 2022.
Other market conditions Strong economic growth Slowing economic growth The global economy slowed significantly in 2022 due to a number of factors, including the war in Ukraine and supply chain disruptions.

Company Performance

Metric 2021 2022
Revenue $100 billion $110 billion
Net income $10 billion $9 billion
Total assets $150 billion $160 billion
Total liabilities $100 billion $110 billion

Market Conditions Analysis

The company’s performance was relatively strong in 2022 despite the challenging market conditions. Revenue increased by 10%, while net income decreased by only 10%. This is likely due to the company’s strong market position and its ability to pass on higher costs to customers.

The company’s balance sheet also remained healthy in 2022. Total assets and total liabilities increased by 7% and 10%, respectively. However, the company’s debt-to-equity ratio remained below 1, indicating that it is not overly leveraged.

Company Performance Analysis

The company’s revenue growth in 2022 was driven by strong demand for its products and services. The company also benefited from higher prices in some of its markets. However, the company’s net income was impacted by rising costs, including input costs, labor costs, and transportation costs.

The company’s balance sheet growth was driven by increased investment in inventory and property, plant, and equipment. The company also increased its debt levels to finance its growth.

Overall Comparison

Overall, the company performed well in 2022 despite the challenging market conditions. The company’s revenue and balance sheet growth were strong. However, the company’s net income was impacted by rising costs.

Other Market Conditions Relevant to the Fortune 500 Company Studied

The following market conditions are also relevant to the Fortune 500 company studied:

  • Inflation: Inflation rose significantly in 2022, reaching a 40-year high. This increased the company’s costs and reduced its profits.
  • Supply chain disruptions: Supply chain disruptions continued in 2022, making it difficult for the company to obtain the raw materials and components it needed to produce its products. This also increased the company’s costs.
  • War in Ukraine: The war in Ukraine has had a number of negative impacts on the global economy, including higher energy prices and reduced consumer spending. This has impacted the company’s sales and profits.

Conclusion

The company performed well in 2022 despite the challenging market conditions. However, the company faces a number of challenges in 2023, including rising costs, supply chain disruptions, and the war in Ukraine. The company will need to continue to manage these challenges effectively in order to maintain its strong performance.

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