FIN 486 Week 3
Individual Assignment Long-Term Financial Needs
Examine financial information for Huffman Trucking, within the Virtual Organization web link located on the course materials page. Read the New Strategic Directions Memo. Calculate external funds needed (EFN) to create the pro forma balance sheet. Calculate the following year-end ratios for the pro forma statements:
- Profit as a percentage of sales
- Current ratio
- Asset ratio
Prepare a 500-word financial report for the CEO containing the EFN calculation, the ratio calculations, and an explanation of how you reached the calculations. Explain which income statement and balance sheet items you assumed were variable instead of fixed.
Format your paper consistent with APA guidelines.
Why are financial ratios used to assess a company’s financial performance? Why are sales reports, profits, debts, or current liability reports insufficient? How have financial ratios been used in your company? Do you think they are an effective assessment of financial performance? If so, why? If not, why?
If you had to pick three commonly calculated ratios to analyze the financial health of a company, which would you analyze? Why would you choose those ratios?