Deliverable 5 – Analysis and Recomendation

Objective

This deliverable will assess your ability to evaluate the strengths and weaknesses of a company through financial analysis.

Instructions

Your client, Jennifer Logan, is a relatively inexperienced investor and is trying to make a decision whether to sell her investment in ABC Company or continue to hold her equity position in it. Ms. Logan has asked you to analyze to analyze the cash flow statement of ABC and provide a recommendation. Using ABC Company’s Statement of Cash Flows, write an analysis and recommendation for Ms. Logan. Do so by completing the following:

1. Download and read ABC Company’s Statement of Cash Flows
2. Write a 3-4 page document for Ms. Logan that:
   1. Defines and explains:
      1. A balance sheet
      2. An income statement
      3. A statement of cash flows
   2. Describes how the statement of cash flows relates to the income statement and balance sheet.
   3. Explains why the analysis of a statement of cash flows is important to investors.
   4. Analyzes and judges the cash flow from operating activities at ABC Company.
      1. Is ABC effective at utilizing funds within the company?
   5. Analyzes and explains the significance of each item from the investing section of the statement.
   6. Analyzes the cash flow from the financing section of the statement and describe why the dividends section is important to your client.
   7. Summarizes your analysis and provides an opinion on:
      1. How effective ABC Company is at managing their cash flow from an investor’s perspective
      2. Whether ABC Company has enough cash on hand to sustain the company long term
   8. Recommends whether Ms. Logan should hold or sell her investment in ABC Company
3. Adhere to professional formal and stylistic principles, and be sure to cite sources when necessary