Discussion: The Big Picture

 In this discussion, we connect the key statements summarizing a firm’s overall financial health, assets and liabilities, activities, earnings, and disposition or use of earnings. This discussion is designed to help you better understand the financial reports required of all large firms that sell ownership shares to the public on a major exchange, such as the New York Stock Exchange.


Earlier this month, you received unexpected news. A college roommate passed away without heirs, leaving you a considerable sum of money. You decide to invest the funds in a Small to Mid-cap firm listed on the New York Stock Exchange(https://www.nyse.com/listings_directory/stock) which means that the firm must give required financial reports and meet minimum financial and non-financial standards). Before you take this step, you would like to convince your significant other that this is a wise investment. You decide to present your Proposal to your “Financial Management” classroom peers before risking its review by your partner.

(Note: You will continue to evaluate the financial performance of this company in Milestone Assignment 1 in the next module).

Case Questions

Initial Post

You will need to select a Small to Mid-cap firm listed on the New York Stock (https://www.nyse.com/listings_directory/stock) and acquaint your peers with your chosen firm. Focusing on the big picture, review the firm’s financial information found in its most recent Quarterly Report (10-Q) published electronically on the firm’s website or the Securities and Exchange Commission’s (SEC) EDGAR Database (https://www.sec.gov/edgar/searchedgar/companysearch) For most companies, this information can be accessed by browsing the “investor relations section,” where you will be able to find the financial statements, including in this case the 10-Q (and the 10-K for more details). Use the firm’s Balance Sheet, Income Statement, and Statement of Cash Flows to help peers understand this firm’s line of business and general financial health to address the following questions:

Section 1

  • What is the business model of this organization (some companies might not provide this information in the 10-Q, in which case you can refer to the 10-K under the heading “Business”)?
  • Identify one risk factor from the risk factor statement (look under the table of contents for Risk Factor Statements).

Section 2

Using information on the Balance Sheet,

  • What is the proportion of debt compared to equity financing?
  • What is the most significant asset item on the balance sheet (the largest monetary amount)?

Section 3

Using information on the Income Statement,

  • What is the largest expense item?
  • What is the profit margin of the company (Net profit divided by Sales)?

Section 4

Using the cash flow statement, examine the three main sections—cash flows from operations, investing, and financing.

  • Identify the main source of cash inflow and cash outflow for this company.

Section 5

Comment on any one aspect of the company you have learned about based on the financial information gathered in sections 2-4.

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