Answer the five questions below, all the info needed can found on that attached spreadsheet. They focus entirely on the financial health of Lame Came Factories (LCF) based on the three years of income statement and balance sheet data provided in the Excel workbook. Base your analysis only on the financial statements provided in the Excel workbook. Please cite your sources..
You must address all five questions and make full use of the information on tabs 2–4 as well as the competitor and industry data in the Excel workbook (ratio, common-size, and cash flow analysis).
You are strongly encouraged to exceed the requirements by refining your analysis
1. How would you assess the overall financial health of Lame Came Factories. (LCF)? You will need to provide a broad view of the main trends that emerge from your analyses of the information in tabs 2, 3, and 4. Your key findings should be synthesized and highlight a clear diagnostic of LGI’s financial strength and/or weakness. [HINT: all 5 questions are interrelated and may sometimes build on each other – it is imperative that you develop a “blue-print” or an outline of what you are answering for each question. Do not answer each question independently as if they were not connected. You should not be redundant but should make sure that you are judiciously coordinating these 5 questions. Question 1 and 5 should be providing the introduction and conclusion of your analysis. Questions 2, 3, and 4 should be providing the “body” or development of your analysis – with a focus on operations, investing, and financing]
2. How is LGI doing in terms of operating efficiency? How would you assess its performance compared to its main competitor and the industry index? What are the principal areas that need to be addressed to strengthen LCF’s bottom line? Identify and use key indicators from all 3 analyses that provide insight about LCF’s operations. [HINT: Focus of this question is the Income Statement and the Net Working Capital (NWC) as it relates to Current Assets and Current Liabilities]
3. How is LCF doing in terms of using assets efficiently? How would you assess it compared to its main competitor and the industry index? What are the principal areas that need to be addressed to strengthen the left-hand side of its balance sheet? Identify and use key indicators from all 3 analyses that provide insight about LCF’s assets. [HINT: Focus of this question is the firm’s assets excluding current asset]
4. How is LCF doing in terms of financial leverage? How would you assess it compared to its main competitor and the industry index? What are the principal areas that need to be addressed to strengthen the right-hand side of its balance sheet? Identify and use key indicators from all 3 analyses that provide insight about LGI’s debt and equity mix. [HINT: Focus of this question is the firm’s liabilities and equity excluding current liabilities]
5. Based on the financial strengths and weaknesses of LCF, how would you prioritize actions that will ultimately satisfy LCF’ s shareholders? Make specific recommendations that clearly identify the decisions LCF’ s board and executives need to make. What actions do they need to take? Set quantifiable targets and objectives for LCF. Your answers must be supported by all arguments developed in questions 2, 3, and 4. In addition, make sure you use data not already used in previous questions. [HINT: Be strategic as you will revisit this question when you reach the last project of this course.]
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