APA, PROVIDE RESOURCES, 10 pgs
In the recent past, spreadsheets became the dominant vehicle for financial professionals, all but replacing calculators. The type of active learning presented in this course, and exhibited during this assessment, will pay dividends as you acquire this important applied skill. In this assessment, you will have the opportunity to connect corporate financial analysis with statistical analysis. It is common for these analyses to be applied to potential opportunities that companies are considering. The modeling tools and techniques you have used in this course will prepare you to use the specific tools of the organization in which you work or consult. Many firms create their own proprietary software to analyze data, so the spirit of this assessment is for you to develop the modeling skill-set to be prepared, no matter what type of financial or statistical models you may face in the future.
For this project, you will propose a financial model by providing analysis, creating procedures, synthesizing modeling techniques, interpreting calculated data, and recommending implementation strategies. These model-building skills will translate to those necessary for you to be successful on a practical basis within any business context. You will need to choose a Fortune 500 Company from the two provided as well as one of two scenarios upon which to build your financial model proposal.
1. CVS – https://www.cvshealth.com/
2. Walgreens – https://www.walgreensbootsalliance.com/index.cfm
Note: You are encouraged to access the Fortune 500 website prior to accessing the individual corporation’s home page. A snapshot of the company that you select is provided once you type in the name of the company. Information such as a SWOT analysis and a snapshot of the company’s current financials are available. This will prove useful in your assessment of which company to use for your final project.
1. Seeking global success is not a new concept to Fortune 500 companies and fuels the argument that all company activities should serve to maximize the wealth of its shareholder’s. Penetrating new markets is a path to potentially large-scaled opportunities and increased return on investment (ROI). Evaluating the feasibility of securing a global presence or expanding (shoring up your domestic presence) locally is the key capital investment trade-off decision facing the organization. As the chief financial officer (CFO), determine the critical elements that will influence your decision using actual company data as guided by the factors outlined within the final project document.
2. Acquiring the competition is often an option to penetrate untapped markets, increase market share, and realize elevated stock performance. As the CFO, you have identified a clear opportunity to become the dominant leader in retail pharmaceutical sales through the acquisition of your principal competitor. The key capital investment trade-off decision facing the organization is whether your organization should acquire the competitor or expand by building new stores throughout the continental United States. What factors will influence your decision?
Using the information provided, prepare a report that thoroughly describes the financial model that you would build. In addition to the required calculations, describe key assumptions, the method of analysis, key results, and your plans to utilize said results. To fully develop your skill-set for future use in the real world, you will also discuss how you plan to present your findings to your supervisor, to a group of colleagues, and to a financial institution that is considering granting your company a line of credit. The rationale is that the method, tone, and slant differ depending on the audience and the ensuing objective.
Specifically, the following critical elements must be addressed:
I. Analysis of Scenario
A. Analyze the overall competitive industry of the firm to determine what variables should go into the model, paying close attention to those issues that can have the largest impact on the firm. Describe why each variable you select is an important driver in this scenario.
B. Analyze the interest rate environment to determine what variables should go into the model, paying particular attention to the effect of current and future rates on the company, especially with regard to securing a line of credit. Describe why each variable you select is an important driver in this scenario.
C. Analyze the overall economy to determine what variables should go into the model, focusing specifically on how the macro-economy may impact this particular company (rather than all companies). Describe why each variable you select is an important driver in this scenario.
D. Discuss the role that variables such as market conditions play in creating financial models that effectively achieve strategic objectives.
II. Appropriate Procedures
A. Describe why the model is needed and define its purpose in terms of providing optimal results. Be sure to defend your rationale.
B. Based on the purpose you defined and the necessary variables you identified, select the most appropriate type of model to fulfill the identified purpose.
C. Provide an explanation bridging the gap between the equations necessary and the conceptual idea. That is, describe how and why the calculations will provide value and benefit the company. Be sure to explain the concepts behind the numbers.
III. Modeling Techniques
A. Define the essential inputs or assumptions you would need to build your model, using evidence and examples to substantiate your claims.
B. Determine the operational performance metrics that you would want your model to achieve.
C. Analyze the financial processes needed to engage in building the model. In other words, describe the financial artifacts you would need, such as cash flow projections, revenue, expenditures, etc.
IV. Interpretation of Results
A. Calculate the operational performance metrics you selected, and analyze the results of your calculations in terms of the company’s needs and the intended purpose of the financial model.
B. Discuss how you would most appropriately convey this analysis to the following decision-makers, being sure to articulate the distinctions necessary to effectively present to the specific audience: 1. Your supervisor. Ensure that you defend your rationale. 2. Your horizontal managers and/or colleagues. Ensure that you defend your rationale. 3. The financial institution considering granting you a line of credit. Ensure that you defend your rationale.
V. Implementation Strategies
A. Based on the anticipated results of the model you would construct from this framework, recommend an implementation strategy that balances risk with return. Be sure to justify your recommendation.
B. Identify key organizational stakeholders who will need to be involved in the implementation, and discuss their roles in ensuring a successful implementation. Be sure to defend your reasoning.
C. Discuss how the strategy you are recommending would effectively balance risk with return. Be sure to substantiate your claims with examples and evidence.