Financial Analysis Team Project #2



Financial Analysis Team Project #2

Pacific Salmon Company, Inc.

Pacific Salmon Company, Inc., By Nabil N. El-Hage, Kenneth A. Froot and Christoher E.J. Payton

Go to the link below and purchase a copy of this case study from Harvard Business Online. It is $6.50 per copy. I suggest using the Sealed Media Copy selection.



1. Read the case study. Stacey Perez and Eloise Abramson have prepared a bid proposal to purchase Pacific Salmon Company, Inc. This has included preparing pro-forma financial projections for the years 2000 thru 2005 as well as an overview of the Industry and Competitive situation. There is also details of the financing arrangement for the purchase of the company. Your job is to analyze the financial data and determine if this is a reasonable proposal.

2. First, you will analyze the pro-forma financial data using financial ratios. You are required as a minimum to use:

a. Use the two (2) Liquidity ratios;

b. Use three (3) Working Capital ratios;

c. Use four (4) Capital Structure ratios; and

d. Use four (4) Profitability ratios;

You will use graphs to present the projected trends and provide intelligent discussion of what you observe. Stating they are going up or down and “this could be a problem” is not adequate. You should determine if the change(s) in the trend is significant and, if so, what could this mean? After you have completed each ratio analysis ask yourself, “does this say anything important that is not obvious to the casual observer?”

You should compare your ratios to external benchmarks that will be posted on Blackboard by the Instructor.

3. Next you will look for relationships in the magnitude and direction (increasing or decreasing) of several categories on the Income Statement and Balance Sheet that have a reasonable connection. You will discuss these relationships. As a simple example, if Accounts Payable is significantly decreasing you would expect Cash to be decreasing in a similar fashion. If you don’t see this occurring then how is Accounts Payable decreasing (cash from Net Income, loans or equity?). You will be graded on the quantity of relationships you present and, more important, the quality of the information you present. If you present and unimportant and meaningless relationship then I will not consider it in the grade. The purpose of this section is to see how well you understand the information presented on the Income Statement and Balance Sheet.

4. Last, you will prepare a final section that will summarize the important facts you discovered in the analysis of the financial ratios, Income Statement and Balance sheet. You will conclude this section will your recommendation on the purchase of Pacific Salmon Company by RR&R Partners based on the financial information.

5. I cannot stress enough that your statements and analysis must be informative and definitive. Vague statements and “so what” analysis will significantly lower your grade. You do not need to prepare long-winded discussions. To repeat, your work needs to be informative and definitive.

6. Spelling and grammar is graded. I highly recommend each team member proofread the final submittal for spelling, grammar and content prior to turning in the project.

Grading Guidelines for a Graduate Course:

o 'A' grade range is reserved for work that is exceptional. This means that it (1) is professional and reflects the writer's/s' careful consideration of audience and purpose; (2) shows perfect to near-perfect understanding of the necessary concepts and analytical tasks; (3) where appropriate, it shows the capacity to think creatively or to see implications beyond the immediate scope of the question; (4) contains all necessary information (invention); (5) is arranged in a logical manner (6), is memorable; (7) delivery is visually appealing; and (7) is free of mechanical errors and is formatted as specified. Work can may have minor flaws but is nonetheless excellent in other ways.

o A grade in the B range means that the work is acceptable at the graduate level to very good. This work satisfies all or most of the requirements of the question/research task, shows the capability to think beyond the task by relating it to other areas of knowledge in or outside of the course; is neatly presented and shows above-average use of academic English. If the work is decently written, is basically formatted correctly, and covers most of the required content, but has several minor flaws or one major flaw.

o A grade in the C range means that the work, while covering much of the required ground, does not show graduate-level analytic and expressive ability. That is, major and minor items may be missing or incorrect; and while the language may communicate most points adequately, it does not qualify as above-average academic work.

o A grade in the D range shows that the work does not, overall, achieve an acceptable level of coverage of the requirements AND/OR the language is insufficient to make the writer's points understandable to the reader. The content may be either incorrect to an unacceptable degree, or very incomplete.

o A grade of F indicates that so little of the required content is covered that grading the paper is an exercise in futility. It may mean that very major points have clearly not been grasped or have been misunderstood by the student. An F may also indicate that the ideas are expressed in such a way that they are not at all understandable to the reader. A grade of F is also awarded when assigned work is not handed in, or not handed in by the set deadline.

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