Financial Statement and Cash Flow Analysis for Jaedan Industries (1700 words)

“Financial Statement and Cash Flow Analysis”

You are to write a six to ten (6-10) page report that responds to the following:

Part A:
Use the financial statements in the text to determine the following for Jaeden Industries.

Calculate Jaedan’s free cash flow.
Calculate Jaedan’s liquidity.
Calculate Jaedan’s debt and profitability ratios.
Calculate Jaedan’s market ratios.

Part B:
Based on your analysis:

Highlight at least three financial strengths and three weaknesses Jaeden Industries may have.
Provide recommendations along with rationale on how Jaeden’s management may improve upon these weaknesses.
The format of the report is to be as follows:

Typed, double spaced, Times New Roman font (size 12), one inch margins on all sides, APA format.
Use headers for each of the subjects being covered, followed by your response.
In addition to the six to ten (6-10) pages required, a title page is to be included. The title page is to contain the title of the assignment, your name, the instructor’s name, the course title, and the date.
NOTE: You will be graded on the quality of your answers, the logic/organization of the report, your language skills, and your writing skills.

The assignment will be graded using the following rubric:

Outcomes Assessed

Evaluate applications of financial management for the financial manager.
Formulate approaches to current asset management, capital budgeting, financial structure, dividend policy, long-term financing, and mergers.
Analyze approaches to current asset management, capital budgeting, financial structure, dividend policy, long-term financing, and mergers.
Use technology and information resources to research issues in financial management.
Grading Rubric for Assignment 1 – Chapter 2 Mini Case: “Financial Statement and Cash Flow Analysis”

Criteria

0
Unacceptable

20
Developing

30
Competent

40
Exemplary

1. Calculate Jaedan’s free cash flow.

Did not complete the assignment or did not calculate Jaedan’s free cash flow; had more than 5 errors in the calculations. Completed with less than 60% accuracy.

Calculated Jaedan’s free cash flow with 3 to 5 errors. Completed with 60-79% accuracy.

Calculated Jaedan’s free cash flow with 1 or 2 errors. Completed with 80-89% accuracy.

Calculated Jaedan’s free cash flow with no errors. Completed with 90-100% accuracy.

2. Calculate Jaedan’s liquidity.

Did not complete the assignment or did not calculate Jaedan’s liquidity; had more than 5 errors in the calculations. Completed with less than 60% accuracy.

Calculated Jaedan’s liquidity with 3 to 5 errors. Completed with 60-79% accuracy.

Calculated Jaedan’s liquidity with 1 or 2 errors. Completed with 80-89% accuracy.

Calculated Jaedan’s liquidity with no errors. Completed with 90-100% accuracy.

3. Calculate Jaedan’s debt and profitability ratios.

Did not complete the assignment or did not calculate Jaedan’s debt and profitability ratios; had more than 5 errors in the calculations. Completed with less than 60% accuracy.

Calculated Jaedan’s debt and profitability ratios with 3 to 5 errors. Completed with 60-79% accuracy.

Calculated Jaedan’s debt and profitability ratios with 1 or 2 errors. Completed with 80-89% accuracy.

Calculated Jaedan’s debt and profitability ratios with no errors. Completed with 90-100% accuracy.

4. Calculate Jaedan’s market ratios.

Did not complete the assignment or did not calculate Jaedan’s market ratios; had more than 5 errors in the calculations. Completed with less than 60% accuracy.

Calculated Jaedan’s market ratios with 3 to 5 errors. Completed with 60-79% accuracy.

Calculated Jaedan’s market ratios with 1 or 2 errors. Completed with 80-89% accuracy.

Calculated Jaedan’s market ratios with no errors. Completed with 90-100% accuracy.

5. Discuss 3 strengths and 3 weaknesses of Jaedan Industries.

Did not complete the assignment or discuss the strengths and weaknesses of Jaedan Industries. Completed with less than 60% accuracy.

Discussed 3 strengths and 3 weaknesses of Jaedan Industries with 60-79% accuracy.

Discussed 3 strengths and 3 weaknesses of Jaedan Industries with 80-89% accuracy.

Discussed 3 strengths and 3 weaknesses of Jaedan Industries with 90-100% accuracy.

6. Provide recommendations with rationale for addressing weaknesses of Jaedan Industries.

Did not complete the assignment or did not provide recommendations and rationale for addressing weaknesses of Jaedan Industries. Completed with less than 60% accuracy.

Provided recommendations and rationale for addressing weaknesses of Jaedan Industries with 60-79% accuracy and logical argument.

Provided recommendations and rationale for addressing weaknesses of Jaedan Industries with 80-89% accuracy and logical argument.

Provided recommendations and rationale for addressing weaknesses of Jaedan Industries with 90-100% accuracy and logical argument.

7. Clarity

Did not complete the assignment or explanations are unclear and not organized.
(Major issues)

Explanations generally unclear and not well organized.
(Many issues)

Explanations generally clear and/or organized. (Minor issues)

Explanations very clear and well organized.
(Added helpful details.)

8. Writing – Grammar, sentence structure, paragraph structure, spelling, punctuation, APA usage.

Did not complete the assignment or had 8 or more different errors in grammar, sentence structure, paragraph structure, spelling, punctuation, or APA usage. (Major issues)

Had 6 - 7 different errors in grammar, sentence structure, paragraph structure, spelling, punctuation, or APA usage. (Many issues)

Had 4 - 5 different errors in grammar, sentence structure, paragraph structure, spelling, punctuation, or APA usage. (Minor issues)

Had 0 - 3 different errors in grammar, sentence structure, paragraph structure, spelling, punctuation, or APA usage.

This material may consist of step-by-step explanations on how to solve a problem or examples of proper writing, including the use of citations, references, bibliographies, and formatting. This material is made available for the sole purpose of studying and learning - misuse is strictly forbidden.

1. Introduction

This report presents an analysis of the financial position of the company Jaedan Industries. Through the analysis of the financial statements, the current liquidity, solvency, market position, cash flow generation & profit generation ability of the company have been analyzed. This information is used to highlight the strengths and weaknesses of the company and accordingly corrective strategies have been recommended.
2. Financial Analysis of Jaedan Industries

2.1. Free Cash flow analysis

The free cash flow of the company has been computed using the formula:
Free cash flow = Operating cash flow – Change in gross fixed assets – (Change in current assets – Change in accounts payable – Change in accrued expenses).
The operating cash flow for Jaedan has been calculated using the formula:
Operating cash flow for 2010 = [EBIT * (1 – tax rate) + Depreciation]
The EBIT has been calculated as:
EBIT = Sales * (1 – Cost of Goods sold) - Depreciation – Selling & Admin expenses = $42,000,000 * (1 – 63%) - $800,000 - $1,621,000 = $13,119,000
The operating cash flow is thus,
OCF = $13,119,000 * (1 – 34%) + $800,000 = $9,458,540....